P271 CJJFAX 271 Mon 27 May 00:43/27 1/7 ANNUITIES An annuity provides a regular lifetime income from a lump sum investment. There are two types: 1/Compulsory Purchase Annuity (CPA) These are bought from pension funds Normally pension plans allow you to buy a better annuity from another life compbnz. This is known as the Open Market Option. 2/Purchased Life Annuity (PLA) PLAt are bought with your own capital and p ov j a vj y high income. CPAs: Mali 272 CPAs: Female 273 CPA Men CPA Women CPA Joint PLA RatesP271 CJEFAX 271 Mon 27 May 00:16/22 2/7 ANNUITIES Annuity rates are calculated with regard to life expectancy, returns on fixed interest investments and life company expenses. This means that rates increase with age, and rise or fall depending on the return on the current yields from medium dated gilts. As an annuity is for life, thjti are a numbjt of options that provide protection from early death, such as guarantee periods and spouse's benefits. Annuities can increase each year as a hj gj against inflation. , , , , ,, ,,,,, , ,,,,,, CPA M n CPA Women CPA Joint PLA R t sP271 CJJFAX 271 Mon 27 May 00:36/22 3/7 ANNUITIES Single or Joint Life Annuities A sjngli life annuity ceases on the death of the annuitant, but you can choose to have the annuity pa mints continue to your spouse if you die before him or her. The spouse's annuity can bj r duced on the intents death, usublly by either 33.3) or 50%. Guarantee Periods Annuities can bj guarantied for a specified period usually 5 or 10 years. The annuity payments will bj made for that period, even if the annuitant dies. CPA Rates: Joint Life 274 CPA Men CPA Women CPA Joint PLA RatesP271 CJJFAX 271 Mon 27 May 00:34/33 4/7 ANNUITJJS £££££££££££££££££££££££££££££ Escalating Annuities (EA) Annuities can increase bz a fixed pjrcentagj, normally 3% or 5% or in lin wi h the tail p ic s ind x. On average an annuity increasing bz 5% compounded per year will result in a starting income 30% less than a level n y Normally the EA will ovjrtakj the level annuity after about 10 years. Although jxpjnsjvj in the short term escalation does protect annuity payments from the effects of future inflation. CPA Min CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Mon 27 May 00:17/32 5/7 ANNUITIES O £ ££££ £££££££££ £££ £ £ £ ££ ££ £ Frequency of Payment Most annuities are quoted monthly. By convention CPAs are quoted in advance and PLAt in arrears. Advance: Payment is made at the beginning of the period. Arrears: At the ind of the period. Payments can also bj 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 RbtesP271 CJJFAX 271 Mon 27 May 00:45/47 6/7 ANNUITIES £££ £ £££ £££ ££ £ ££ £ Taxation Compulsory Purchase Annuities are taxed as jarnjd income and are usually pbid net of basic rate tax. Purchbsjd Life Annuities. Each pbzmjnt includes a repayment as part of the original capital, known as the capital cont nt. This is deducted from the gross annuity before applying your tax rate. Thus PLAt have a significant tax adv ntag bjcau j tax i p i only on a small amount of each payment. Annuity Rates pages 272-277 CPA M n CPA Women CPA Joint PL R resP271 CEEFAX 271 Mon 27 May 00:10/22 7/7 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. Thjr are companies which off good rates which are only available to specific groups. Thjsj are not quoted. For example, The Royal National Pension Fund for Nurse . CPA Annuity Rates: Mali 272 CPA Annuity Rates: Female 273 CPA Joint Life Rates 274 Purchased Life Annuities 275 CPA Min CPA Women CPA Joint PLA RatesP271 CJJNA9h201 Ron 27 May app:u0/2: W \Z\JX QU UJ W V 3 aP#Z+$ NCO@PBS SPP] AVnujty -pdate 204 Matkjt Arrivals 205 Annuity Rater 270 Tax G5idj 280 Panjju: Stock Market 206 Unit Tryst 207 S05TNG BANK HOLRDAY MatSjtacovjtagj 240 CC @ jl I1:^kp +Q]Rkc C jmhjx 8,^9 +1O1@ Nikkei 51,7:8.*3 +74.35 £QLTL,,,,,L<],L,,,,T,,T,,XLL,TL,,,,T,, Sport 300 TVORadio 600 Je!tuti 1 FTS @1p0 CLonhon aOhtions