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Unit Linked annuity is very similar to a 'With
Profits' annuity, with the same features and options.
The main difference is in the way
your pension fund is invested - in Unit Linked funds.
With unit-linked policies, the investment amount buys
units in the fund of the investor’s choice. The
value of a policy is measured by the value of the units
allocated to it, which is dependent on the performance
of the fund(s) in which the money is invested.
Most life company’s have a variety of funds on
offer each with different risk and growth prospects.
Your initial payout, and future payments received, are
dependent on underlying Unit Linked performances.
Often the investor is allowed to assume a future rate
of growth. The higher this assumed rate the greater
your initial income, however if the actual growth does
not match this rate then the amount of pension payable
will decrease.
Tax Free Cash
Most types of pension plan have the option of first
taking a tax-free cash lump sum before exchanging the
residual fund for a series of payments. Once an annuity
has been purchased there is no further entitlement to
tax-free cash, therefore the decision of whether to
access the cash or not needs to be made prior to the
annuity selection.
Income
Annuity payments are taxed at source under
the PAYE system, and amounts will increase or decrease
in depending on fund performance relative to the assumed
growth rate.
Death Benefits
The option of what type of death benefits
to include must be made at outset. The
options available are to provide for a Spouse or Civil
Partner / dependent's pension. The spouse's pension
can be for the full amount of the original pension or
for a specified percentage.
- You can fund a spouse or partners pension for up
to 100% of what you received.
- You can guarantee that for a period of ten years
after you die your estate still receives your remaining
payments.
- You can opt for the capital protection option which
means that if you die before the age of 75 your payments
minus the gross you already received can be paid out
but are taxed at a flat rate of 35%.
Advantages
- You will receive a guaranteed income for life,
and you can elect for your spouse to receive a guaranteed
income for their life upon your death.
- Tax-free cash is available at outset.
- There are no additional charges applied to the contract
once in force. All charges are taken at outset and
are reflected in the annuity rate offered.
- The contract is simple to understand, there is
no need to review the contract and there is minimal
paperwork needed to start the payment of benefits.
Considerations
Your income level cannot be guaranteed. It is also subject
to future investment returns.
All death benefit options must be selected at the outset
and cannot be altered; these can also result in a lower
initial payment.
Suitability
If you require a certain amount of security
but also want the opportunity to benefit from possible
future investment returns, then a Unit Linked annuity
may be a good option for you. This type of annuity will
suit individuals with low to medium attitudes to risk
and security.
Get the Full Story
Robert Bruce Associates
can offer you specialist, helpful and clear advice on
these Annuities, to help you make an informed choice.
Our qualified advisors will ensure any decision is made
only once you have all the facts in hand, and only as
a result of establishing your personal wishes and criteria.
Why not call us today?
Get the most out of
your retirement.
Call us today
on: 0845 838 7377
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