P271 CEEFAX 271 Sun 8 Jun 23:05/06 1 7 n1 . N KIT S income from a lump sum investment. Thjte are two types: Normally pension plans allow you to buy a better annuity from another life compan . This is known as th Open Ma prion. 2/Purchased Life Annuity (PLA) PLAt are bought with your own capital and provide a vj y high income. CPAs: Mal 272 CPAs: Fjmal 273 CPA Men CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Sat 8 Jun 23:53/23 /7 n n £££ £ £ £ ££ £ £ Annuity rates are calculated with r ga h to lif xp ctancy, r turns on fixed inte est inv sum nt a d lif compan expenses. hi means t at rat inc as wi h return on the current ields from As an annuity is for life, thjti are a numbjt of options that provide protection from early death, such as benefits^ a hjdgj against inflation. ] , , , ,,, , , ,, , , CPA Men CPA Won n CPA Joint PLA RateP271 CEEFAX 271 Sat 8 Jun 23:58/29 3/7 ANNUITIES A singl lif annuit ceases on th death of the annuitant, but you can choose to have the annuity payments before him or her. hj spouse's annuity can bj r duc d o t nt a , s h 0 Guarantee Periods Annuities can bj guaranteed for a specified pjtiod usually 5 or 10 years. The annuity pazm nus will bj made for that period, even if the annuitant dies. CPA R t s: Joint Life 74 CPA M n CPA Won n CPA Joint PLA t sP271 CEEFAX 271 Sat 8 Jun 23:06/44 4/7 1 |.% T ES scalating Annuiti s (EA) Ann ti s can inc asj a fix d percentage, normally 3% or 5% or in line with the retail prices index. On ave age an annuity incs asing bz 5% compounded per year will result in a starting income 30% less than a luvjl Norm lly the EA w ov tag th l l annuity after about 10 years. Although expensive in the short term escalation does protect annuity payments from the effects of future inflation. ] CPA M n CPA Won n CPA Joint PLA RateP271 CEEFAX 271 Sun 9 Jun 00:04/04 5/7 ANNUITIES ££££££££££££££££££££££££££££££££ Frequency of Payment Most annuities are quoted monthl=. B8 convention CPAs are quoted in advance and PLAt in arrears. Advance: Payment is made at the beginning of the pj iod. Arrears: At the end of the pjtiod. Payments can also bj made annually, half yearly or qubzterly. Annually in arrears will give the highest payment, but, quarterly in arrears is the most common alt native to monthly payments. CPA M n CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Sat 8 Jun 23:04/34 4 l4 7 Taxation Compulsory Purchase Annuities are taxed as earned income and are usually Purchase Life Annuities. part of the original ca sal, known as This is deducted from th gross annuity fo apply ng you tax rat . -hus PLAt have a significant tax adv ntag b cause tax i ai only on a s all amount of each pa mint.P271 CEEFAX 271 San 8 Jun 00:05/54 7/7 AN UITIES 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 li htl hi h r t Rat w l bj affected bz exact age and choic of benefits. There are companies which offer good rates which a only av ilabl to specific groups. Thjsj are not quoted. For example, The Royal National Pension Fund for Nurses. CPA Annuity Rates: Mali 272 CPA Annuity R res: Female 273 CPA Joint Life Rates 274 Purchased Life Annuities 275 CPA Min CPA Women CPA Joint PLA Rates