Level Annuity – This pays a fixed annual income. It ceases on death on annuitant or spouse if taken out on a joint life basis.
Capital Protected (Guaranteed) Annuity - An annuity that will pay any difference between the cost of buying the annuity and the gross income received up until the date of death as a lump sum.
Equity-Linked / Unit Linked Annuity - The annuity fund buys units in an investment fund. The income is provided by encashing units each year up to a permitted maximum. As the value of the fund is linked to the markets, the value of the units and the level of the annuity will vary. However growth of the investment fund could provide an increasing income to help reduce the effects of inflation.
Increasing - Annuity payments increase each year to counter the effects of inflation. The income will start at a lower level than for a level annuity, where the income does not increase. The increase may be fixed at a certain percentage or linked to the Retail Price Index. It ceases on death of annuitant or of the spouse if taken out on a joint life basis.
Guaranteed - An annuity that will continue for a stated number of years or pay the income due for the remainder of the guaranteed period on death.
Impaired Life –Individuals who have a shortened life expectancy as a result of poor health may be able to buy an impaired life annuity that will pay a higher level of income
Retirement Annuity Plan - Also known as "Section 226" contracts.
The forerunner to Personal Pension Plans (PPPs) they ceased to be available in July 1988. Payments can still be made to existing plans. They were similar to PPPs but the rules that determine the maximum contribution, the way the tax free cash sum is calculated and when the pension can be taken were different. Since A-Day on the 1st April 2006, these plans rules were brought in line with PPP’s.
Temporary - An annuity where payments stop at the end of either a fixed term, or on the prior death of the annuitant, whichever comes first.
With Profit - The annuity is linked directly to a With Profit fund, as bonus levels will vary according to investment conditions and fund performance, so will the level of the income. There are a limited number of providers for this product.
