P271 CEEFAX 271 Mon 4 Nov 21:48/14 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 firm. This is the Open Market Option. 2/Purchased Life Annuity (PLA) PLAt are bought with your own capital and provide a vjty high income. CPAs: Mali 272 CPAs: Female 273 Sport 300 TV/Radio 600 CPA Men CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Mon 4 Nov 21:31/44 2/7 ANNUITIES Annuity rates are calculated with regard to life expectancy, returns on fixed interest investments and life company expenses. Rates increase with age, and rise or fall depending on the return on the current yields from medium dated gilts. Annuities are for life, so thjte are sjvjtal options that provide protection from early death, such as guarantee periods and spouse's benefits. Annuities can incteasj each year as a hedge against inflation. Selection of annuity rates 272-277 Sport 300 Wjathjt 400 Travel 500 CPA Min CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Mon 4 Nov 21:39/41 3/7 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 spots if you die before him or hit. The spouse's annuity can bj cut on the intents death, usually bz 33.3% or 50%. Guarantee Periods Annuities can bj guarantied for a specified pjtiod usually 5 or 10 years. Payments will bj made for that pjtiod, even if the annuitant dies. CPA Rates: Joint Life 274 Sport 300 Wjathjt 400 Travel 500 CPA Min CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Mon 4 Nov 21:17/44 4/7 ANNUITIES Escalating Annuities (EA) Annuities can incteasj bz a fixed percentage, normally 3% or 5% or in line with th retail prices index. On average an annuity increasing bz 5% compounded a year will give a starting income 30% lower than a level annuity. Normally the EA will overtake the level annuity after about 10 years. Although expensive in the short term, escalation does protect annuity payments from the effects of inflation. Sports news 300 Travel 500 Wjathjt 400 TV/Radio 600 CPA Min CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Mon 4 Nov 22:05/42 5/7 ANNUITIES 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 end of the pjtiod. 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. Sport 300 Wjathjt 400 Travel 500 CPA Min CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Mon 4 Nov 22:13/12 6/7 ANNUITIES Taxation Compulsory Purchase Annuities are taxed as earned income and are usually 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 advantage because tax is paid only on a small amount of each payment. Annuity Rates pages 272-277 CPA Min CPA Women CPA Joint PLA RatesP271 CEEFAX 271 Mon 4 Nov 21:10/12 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. Thjte are companies which offer good rates which are only available to specific groups. These are not quoted. For example, The Royal National Pension Fund for Nurses. 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 CEEFAX 271 Mon 4 Nov 21:07/1: 4/7 ANNUITIES Escalating Annuities (EA) Annuities can increase bz a fixed percentage, normalMy 3% or 5% or in line with the retail prices index. On avjtage an annuity increasing bz 5% compounded a year will give a starting income 30% lower than a level annuity. Normally the EA wmll overtake the level annuity after about 10 years. Although expensive in the short term, escalation doer protect annuity payments from the effects of inflation. Sports news 300 Travel 500 Weathjt 400 TV/Radio 700 CPA Min CPA Women CPA Joint PLA Rates