Phillip is 65, lives with his spouse Sue who is also 65, and has £100,000 in his pension fund to buy an annuity. He’d like to compare Option B with Option C. A Lifetime Annuity – our Option B – would be ﬁxed for the rest of his life, based on his personal circumstances today. Let’s see what would happen if those changed … and how a Fixed Term Annuity might be better for him.*
|Lifetime Annuity||5-year Fixed Term Annuity|
|£3,309 per year for whole of life with 100% spouse protection so his wife Sue can receive his annuity if he dies.||£5,962 per year for 5 years, leading to a £48,446 GMA (Guaranteed Maturity Amount) to choose a different option, perhaps a Lifetime Annuity.|
After five years with Option C, Philip can reassess his choices.
|Phillip & Sue are both alive and healthy||Phillip has been diagnosed with Type 2 Diabetes||Sue has passed away|
|With his GMA, he chooses a Lifetime Annuity. The annual income from £48,446 would be £2,113 for life with 100% spouse protection.||His annual annuity for life would rise to £2,184 per annum still covering Sue with 100% spouse protection.||If Sue was to die and Phillip chose to have no other death benefit, Phillip receives £2,157 per annum, and the payments die with him. **|
*Based on a fund of £100k and taking the 25% Tax Free Cash of £25,000, with 100% value protection over a 5 year ﬁxed term, taking tax free cash, with death beneﬁts as noted. Source: MyPensionExpert, 21/03/2017.
** Death beneﬁts would be dependant on provider.