Flexible Annuity

Like other annuities flexible annuities pay an income for life but, as their name suggests, they provide more flexibility than many of the available alternatives.

Advantages

Income for life

A flexible annuity provide an income for life, like a conventional annuity. In effect it is an insurance against living too long and outliving your means.

Control over your income

You have more control over your income, as there is more flexibility than other annuity options. If you choose, your money can stay invested within your chosen investment funds until you are aged 80+.

Disadvantages

Income can vary

Your income is linked to the performance of your chosen funds and isn’t guaranteed. The amount of annuity payments you receive in future years could be lower than the amount you start with.

The amount of income you are allowed to take (your ‘income limits’) can go down as well as up after an income review.

How it works in more detail

Flexibility and freedom

Put simply, flexible annuities offer freedom over four key retirement income areas:

Investment

You have control of how your pension fund is invested across a range of investment funds. Your income will depend primarily on the performance of these funds.

Income

You can control the amount of income you take (between limits) until you are aged between 80 and 90. The income limits are reviewed every 3 to 5 years.

Inheritability

You can provide financial security for dependents by choosing a joint-life annuity and/or you can protect some of your fund for your dependents or your estate by ‘ring fencing’ a proportion of your pension fund in case you die early.

Insurance

Your funds will receive ‘survival bonuses’, representing the feature of annuities whereby incomes of those who die early go towards paying the incomes of those who live longer. This feature helps to make the underlying value of your annuity clear and transparent. This is made clear on statements that you will receive each year.