Investment Linked Annuity
An investment linked annuity provide a regular income payable throughout your life, with the potential for a rising income, which may protect your future income against inflation.
Retirement income
- You have the opportunity to receive a rising retirement income.
- You can select your starting income within the limits available.
- Your retirement income can fluctuate depending upon the underlying investment performance.
- If you suffer from certain medical or lifestyle conditions you could get a higher retirement income.
- You have the same options as with a conventional annuity.
The retirement income you receive may begin higher or lower level than a traditional annuity and will change in line with the growth (or loss) in the underlying investment funds to which it is linked. These investment funds may go down as well as up in value which means that your income may go down as well as up.
This table shows some of your choices when comparing a conventional annuity to an investment linked annuity.
| Your Choices | Conventional Annuity | Investment Linked Annuity |
| Can you take a tax free cash lump sum? | Yes | Yes |
| Will you get a secure income for the rest of your life? | Yes | No |
| Can your income increase over time?* | Yes | Yes |
| Are you tied into an annuity rate for life? | Yes | No |
| Can you vary the amount of income you take? | No | Yes |
| Will your income vary with investment performance? | No | Yes |
| Can you provide for someone else after you die? | Yes | Yes |
* You can choose to have an increasing income with a conventional annuity if you select the appropriate option at outset.
To find out if an investment linked annuity is right for you, request a free quote or call free on 0808 1787 335.
How an investment linked annuity works
You select your starting level of income between the minimum and maximum amounts available under the plan. Your income in future months and years is determined by future returns of the investment fund(s), in relation to your required fund performance.
If you choose to have a low starting income, the required future fund performance will be low. Your future income will then have a greater opportunity to increase with less chance of reducing. If you choose to have a high starting income, your future income will have less chance of increasing and a greater chance of reducing.
Annuities
There are two main types of investment linked annuities; a with profits annuity and a unit linked annuity. A with profits annuity invests your pension fund in the with profits fund of the life insurance company offering the plan, whereas unit linked annuities invest in specific stocks and/or shares selected by you. The latter presents a gretaer investment risk.
If you suffer from certain medical conditions or if you smoke, you may be able to purchase an investment linked annuity on enhanced terms, providing you with a higher level of retirement income.
Annuity income
An investment linked annuity comes with a guarantee that your annuity income will never fall below a certain minimum level, regardless of future fund performance.
Annuity options
Various annuity options are available. You can choose to switch to a conventional annuity at anniversary dates, although some restrictions may apply. In addition, you have the same annuity options as a conventional annuity provides, e.g. spouse’s pensions and guarantee periods.
