Features and benefits

Features

  • Conventional lump sum contract where the annuity is payable for life
  • Provides your client with a taxable income for the rest of their life
  • Gives the choice of a tax-free cash sum at the start in exchange for a smaller taxable income (for Personal Pension Plan with Immediate Retirement, also referred to as Immediate Vesting Personal Pension)
  • Single or joint life

Eligibility

  • At least age 55 but less than 75 at entry

Income choices

  • Level income
  • Increased at a fixed percentage (0-8.5% in steps of 0.1%) each year
  • Varies in line with changes in RPI
  • Choice of payment frequency - monthly, quarterly, half yearly, yearly
  • Paid in advance or arrears

Purchase price

  • No minimum

Restrictions

  • Once set up the client can't cash the plan in, or change the basis of their income

Reporting

  • Annual P60 confirming tax paid and usage of lifetime allowance

Tax

  • Income from an annuity will be treated as earned income and will be taxable
  • If your client decides to take a cash sum, it's normally tax-free
  • We'll deduct tax from each income payment before it's paid
  • HM Revenue & Customs will notify us of the relevant tax allowances and we'll take these into account in working out how much tax to deduct
  • If your client selects a joint life annuity, or a guaranteed period, and dies before they are 75, any income paid after the client’s death will not normally be subject to income tax, although any income paid to the client or dependant’s estate may be subject to Inheritance Tax
  • Tax rules may change in the future

Risks

  • Once it's set up, your client can't cash in their plan or change the basis of their income, even if their circumstances change
  • When your client dies, their income will normally stop. The total amount paid out may be less than the amount that was originally used to purchase the annuity
  • Your client will receive a lower income during their lifetime if they choose to have an income paid to their dependant after they die
  • If your client chooses an income that doesn't increase or increases at a rate lower than the future RPI, inflation could reduce what they can buy with it
  • If your client chooses an income that is linked to RPI it will vary in line with prices, and in the event of RPI being negative, it could go down
  • If your client transfers from another plan any guaranteed benefits associated with this would be lost on transfer

Important notice

Please note that charges, terms and limits may change. Tax treatment depends on the individual circumstances of your client and may be subject to change in the future.

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Scottish Widows Limited. Registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.

Scottish Widows Unit Trust Managers Limited. Registered in England and Wales No. 1629925. Registered Office in the United Kingdom at Charlton Place, Andover, Hampshire SP10 1RE. Tel: 0345 300 2244. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 122129.

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