P271 CJEFAX 271 Fri 6 Jan 21:08/48 G ANNUITIES An annuity provides a regular lifetime income from a lump sum investment. There are two types: 1/Compulsory Purchase Annuity (CP—) Thjsj are bought from pension funds Normally pension plans allow you to buy a better annuity from another life company. This is known as the Open Market Option. 2/Purchased Life Annuity (PLA) PLAt are bought with your own capital and provide a very high income. CPAs: Male 272 CPAs: Female 273 CPA Men CPA Women CPA Joint PLA RateP271 CJJFAX 201 Fri 6 Jan 21:10/48 NET CONSUMER CRrDIT EXPlNDS 25% h 5 OIL OUTPUT hits sjvjn-year high 2 US JOBL SS R TE fell last month 9 aHINO GROUP issu f loss warning 204 £/ 1.5515 - .0122 Gold/oz $375.50 £ index 79.6 -X.3 Dow 3,86 .4t +1s.th FT-SE 3065.0 +32.7 at CLOSE FUSE Indices 241 Savings 0 Dow Jones 242 Annuities a 70 Exchanges 250 Economy 2 0 City News FT-SE 100 London SharjtP271 CEEFAX 271 Fri 6 Jan 21:19/47 G ANNUITIES Single or Joint Life Annuities A single life annuity ceases on the death of the annuitant, but you can choose to have the annuity payments continue to your spouse if you die before him or her. The spouse's annuity can bj reduced on the intents death, usually b= either 33.3% or 50%. Guarantee Periods Annuities can bj guaranteed for a specified period usually 5 or 10 years. The annuity payments will bj made for that period, uvjn if thu annuitant dies. CPA Rates: Joint Life 274 CPA Men CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Fri 6 Jan 21:01/57 4/7 ANNUITIES Escalating Annuities (EA) Annuities can increase bz a wixed percentage, normally 3% or 5% or in line with the retail prices index. On average an annuity increasing 2: 5% compounded per yjaz will give a starting income 30% less than a level annuity. Normally the EA will ovjrtakj the level annuity after about 10 years. Although expensive in the shout term escalation does protect annuity payments from the effects of future inflation. CPA Men CPA Women CPA Joint PLA RaterP271 CEEFAX 271 Fri 6 Jan 21:03/21 G ANNUITIES Frequency of Payment Most annuities are quoted monthly. By convention CPAs are quoted in advance and PLAt in arrears. Advbnce: Payment is made at the beginning of the period. Arrears: At the end of the period. Payments can also be made annually, half yearly or quarterly. Annually in arrears will give the highest payment, but, quarterly in arrears is the most common alternative to monthly payments. CPA Men CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Fri 6 Jan 21:00/31 6/7 ANNUITIES Taxation Compulsory Purchase Annuities are taxed as earned income and are usublly paid net of basic rate tax. Purchased Life Annuities. Each payment includes a repayment as part of the original capital, known as the capital content. This is deducted from the gross annuity before applying your tax rate. Thus PLAt have a significant tax advbntagj bjcausj tax is paid only on a small amount of each payment. CPA Men CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Fri 6 Jan 21:09/26 G ANNUITIES The annuity tables on pages 272-5 show the top paying companies for a purchase price of £10,000. Higher purchase prices will give a slightly higher rate. Rates will also bj affected bz exact age and choice of benefits. -here are companies which offer good rates but are only available to specific groups. Thjsj are not quoted, eg, The Royal National Pension Fund for Nurses. CPA Annuity Rates: Male 272 CPA Annuity Rates: Female 273 CPA Joint Life Rates 274 Purchased Life Annuities 275 CPA Men CPA Women CPA Joint PLA RatesP271 CJKGAX 201h Fri p61Jan 21:;:/43 ^ NET CONSUMER CREDIT EXPANDS 25% 205 OIL OUTPUT hits seven-9rar high 203 US JOBLESS RATE fell last month 209 5HINO GROUP isszjs jots warning X4 £/DM 2.4219 - 0.0026 Oil $16.40 +0.05 £ index 79.6 -0.3 Nikkei 19,519.46 - 96.65 FT-SE 3065.0 +52.7 at CLWSE News index 0 202 SHARECHECK 0 20 Diary 214 Options 0 :30 5jsults 215 Market reports 240 City News FT-SE 100 London Shares