P261 CEEFAX 261 Mon 18 Nov 21:48/52 1/8 An annuity provides a regular lifetime income from a lump sum investment. Thjte 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 anothjt 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. STANDARD VARIABLE RATES MOVED TO 252 Sport 300 Front Page 100 CPA min YourMoney CityNiws Main MenuP261 CEEFAX 261 Mon 18 Nov 21:14/21 2/8 Annuity rates are calculated with regard to life expectancy, returns on fixed interest investments and life company expenses. Rates incteasj with age, and rise or fall depending on the return on the current yields from medium dated gilts. Annuities are for life, so there are sjvetal 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. STANDARD VARIABLE RATES MOVED TO 252 Sport 300 Weather 400 Front Page 100 CPA men YourMonjy CityNiws Main MenuP261 CEEFAX 261 Mon 18 Nov 21:10/00 3/8 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 hit. The spouse's annuity can bj cut on the intents death, usually bz 33.3% or 50%. Guarantee Periods Annuities can bj guaranteed for a specified period usually 5 or 10 years. Payments will bj made for that pjtiod, even if the annuitant dies. STANDARD VARIABLE RATES MOVED TO 252 Sport 300 Weathjt 400 Front Page 100 CPA men YourMoney CityNiws Main MenuP261 CEEFAX 261 Mon 18 Nov 21:50/47 4/8 Escalating Annuities (EA) Annuities can incteasj bz a fixed percentage, normally 3% or 5% or in line with the 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. STANDARD VARIABLE RATES MOVED TO 252 Weather 400 Front Page 100 CPA men YourMoney CityNiws Main MenuP261 CJEFAX 261 Mon 18 Nov 22:11/24 5/8 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 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. STANDARD VARIABLE RATES MOVED TO 252 TV/Radio 600 Front Page 100 CPA min YourMoney CityNiws Main MenuP261 CEEFAX 261 Mon 18 Nov 21:16/56 6/8 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. STANDARD VARIABLE RATES MOVED TO 252 Sport 300 Wjathet 400 Front Page 100 CPA min YourMoney CityNiws Main MenuP261 CEEFAX 261 Mon 18 Nov 22:17/31 7/8 Impaired Life Annuities If you are in bad health, you may bj able to increase your annuity by applying for an impaired life annuity. Two companies, Sun Life and the Pension Friendly Annuity Society, offer bjttit rates for those with medical conditions such as heart problems and cancer. Stalwart Assurance offers higher rates for smokers, those with diabetes, high blood pressure and high cholesterol. CPA Annuity Rates: Mali 262 CPA Annuity Rates: Female 263 CPA Joint Life Rates 264 BBC CEEFAX FRONT PAGE 100 CPA men YourMonjy CityNiws Main MenuP261 CEEFAX 261 Mon 18 Nov 21:18/14 8/8 The annuity tables on pages 262-5 show the top paying companies for a purchase price of £10,000 and £100,000. 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 262 CPA Annuity Rates: Female 263 CPA Joint Life Rates 264 STANDARD VARIABLE RATES MOVED TO 252 BBC CJEFAX FRONT PAGE 100 CPA men YourMoney CityNiws Main Menu