Annuities

Annuities in detail

• Conventional annuities
• Features
• Charges
• Risks

Conventional annuities

Scottish Widows offers conventional annuities; this is the easiest and simplest kind of retirement income. The amount of gross income is fixed when you buy it and it’s secure for life.

It’s also easy to compare annuity providers (remember, you don’t have to buy your annuity from your pension provider). The income you will receive is largely determined by your age, gender and interest rates at the time of purchase. You can compare what you would get in exchange for your pension fund from different providers.

If you choose a level annuity, your income is the same for the remainder of your life. If you choose to offset the effect of inflation by increasing it each year, your income will initially be lower than a level annuity.

Features

• You can choose to have your pension income paid; monthly, quarterly, half-yearly, yearly, in advance or arrear
• You can choose to take your income:
  • The same amount of income every year, or
  • Income that increases at a fixed rate (for example, 3% a year)
• You can also choose to
  • Have an income paid to your spouse or partner on your death
  • Choose a minimum term (for example five years, where on death any remaining annuity instalments continue until the end of the guaranteed period).

You should remember that taking these options will result in a lower pension.

• Regular payments will be made direct to your bank or building society through the Bankers Automated Clearing services Ltd. (BACS) system.

Charges

• Conventional annuities carry no separate charges. You can compare the value for money offered by different providers simply by looking at the income you might get for your pension fund.

Risks

The level of income you receive from your pension plan will depend upon a number of factors including the value of the plan when you decide to take your pension, which isn’t guaranteed and can go down as well as up.

Need further information?

See our FAQs or contact us.

View our pensions guides and calculators.

Not for you?

View our Retirement Account.