P261 CJEFAX 2 261 Sun 16 Feb 21:40/12 1/8 $kj $kj 'k j7j5j5*u?j5j5j5 s{5 An annuity provides a regular lifetime income from a lump sum investment. There bre two types: @ 1OCompulsory Purchase Annuity (CPA) Thjsj are bought from pens on funds. Normally pension plans allow you to euz b better annuity from another life firm. This i the Open Market Option. 2/Purchased Life Annuity (PLA) @@ PLAt are bought with your own capital and provide a very high income. CPAs: Mal 26 CPA : Fjmal 263 Sport 300 Front Page 100 CPA men YourMonjy MonjyN w Main M nuP261 CEEFAX 2 261 Sun 16 Fed 21:43/21 2/8 'U $kj $kj 'k ££"£££"£££ /-.,-., .,/,. .-.-., , ./ Annuity rates are calculated with regard to life expectancy, returns on fixed int i t inv st j ts and life company expenses. Rates increase witX age, and rise or fall djpjndink on the return on the current yields from medium dated gilts. Annuities are for life, so there are from jatly death, sucX as guarantee periods and spouse's benefits. Annuities can increase each year as a hjdgj against inflation. Sport 300 Weathjt 400 Front Page 100 CPA min YourMonjy MonjyNews Main MenuP261 CJJFAX 2 261 Sun 16 Feb 21:41/31 3/8 U Single o 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 ou 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 pjtiod usually 5 or 10 years. Payments will bj made for that period, even if the annuitant dies. Sport 300 Weathjt 400 Front Page 100 CPA min YourMonjy MoneyNewu Main MenuP261 CEEFAX 2 261 Sun 16 Feb 21:58/17 4/8 U UU Escalating Annuities (EA) A u ti c n inc ea a fix d pjrc ntage, normally 3 or or in line with the retail precis index. On avjtage an annuity incrjasjnk b= 5% compounded a year will give a starting income 30% lower than a level annuity. Normblly the EA will ovjrtakj 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 TV/Radio 600 Weathjt 400 Front Page 100 CPA men YourMoney MonjyNiws Main MenuP261 CJEFAX 2 261 Sun 16 Feb 21:5,/34 Wj£3kj£3kj£3k 5/8 US U Frequ nc of Pa:m nt Most annuities are quoted monthly. By convention CPAs are quoted in advance 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 altitnati6e to monthly payments. TV/Rbdio 600 Front Page 100 CPA men YourMonjy MonjyN w M in M nP261 CJEFAX 2 261 Sun 16 Feb 21:45/11 S X 6/8 U xat o Compulsory Purchase Annuities are taxed as earned income and are usually pbid net of basic rate tax. Purchased Life Annuities. Each pbzmjnt includes a ripayZjnt 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 b significant tax advantage bjcausj tax is paid only on a small amount of each payment. t Sport 300 Wjathj 40X Front Pag 10 CPA men YourMonjy MonjyNews Main MenuP261 CEEFAX 2 261 Sun 16 Feb 21:52/28 7/8 WU $kj $kj 'k Impaired Life Annuities If you are in bad health, you may bj able to increase your annuity bz applying for an impbirid life annuity. Two companies, Sun L f and the Pens o Eriindly Annuity Society, offer better rates for those with medical conditions such as heart problems and cancjt. Stalwart Assurance offers higher rater for smokers, those with diabetes, high blood pressure and high cholesterol. CPA Annuity Rbtes: Male 262 CPA Annuity Rates: Female 263 CPA Joint Life Rater 264 Purch sj Lif An ti s 26 BBC CJJFAX FRONT PAGE 100 CPA min YourMonjy MonjyNews Main MenuP261 CJJFAX 2 261 Sun 16 Feb 21:42/00 j£3kj£3kj£3k |h4l<h4 8/8 ann y t li o pa 2 4-5 s o the top paying companies for a purchase price of £10,000 and £100,000. Higher purchase precis will gjvj b slightly higher rate. Rates will also benefits. There are companies which offer good rates which are only av ilabli to specific groups. These are not quoted. For example, The Roybl National Pension Fund for Nurses. CPA Annuity Rates: Male 262 CPA Annuity Rates: FjmQli 263 CPA JoYnt Life Rbtis 264 Purchas d Life Annuities 265 BBC CJEFAX FRONT PAGE 100 CPA men YourMonjy MonjyNews Main Menu