Pension Income Calculator
Fixed Term Annuity
A guaranteed income for a fixed term PLUS a tax-free lump sum
A more flexible type of annuity that allows you to keep your options open without being locked into a lifetime annuity. When the term ends you can opt to leave yourself a guaranteed maturity amount and you are free to shop around again for a new pension product or take your remaining pension pot as cash. You can also opt to strip the fund down over that fixed term period.
- A regular income for a fixed term and you decide the term (generally between 3 and 25 years).
- A guaranteed maturity amount (GMA) or lump sum is paid at the end of the fixed term.
- The amount of GMA is determined at the beginning of the annuity.
- Your retirement income won’t be subject to stock market fluctuations.
- You can still take a 25% tax-free lump sum from your pension savings with a fixed annuity but this will be taken at the beginning of the annuity.
Might be suitable for you if
- You don’t want to be locked into a deal for life.
- You would like a secure income, with some flexibility.
- You want to keep your options open to see if your circumstances change, annuity rates increase or you want to take a different pension income option in the future.
- You don’t want to take any investment risk.
- You just want access to tax-free cash and wish to defer taking your income.
- Or you have other pensions funds which will start at a later date.
Things to consider
- Your income will stop when you die unless you include death benefits in your plan. If you want your income payments to continue for your partner or dependents when you die there are a few options:
- joint-life annuity – your partner will continue to receive an income if you die, this can be the same income or a reduced amount
- a guaranteed period – where your income will be paid for a guaranteed period (up to 30 years) even if you die within that period. If you live beyond the guarantee period you will still continue to receive the same level of Income until you pass away.
- value protection – If you die before the total amount used to purchase the annuity is paid back in income; the remainder will be paid to your estate or your nominated beneficiary (including death benefit).
- Adding death benefits or linking your annuity to inflation will reduce your starting income but may give you the added benefit of peace of mind in retirement.
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