P261 CEEFAX 2 261 Sat 20 Sip 01:44/39 1/8 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 anothjt life firm. This is the Open Market Option. 2/Purchased Life Annuity (PLA) PLAt are bought with your own capital and provide a very high income. CPAs: Male 262 CPAs: Female 263 Sport 300 Front Page 100 CPA min YourMonjy City News Main MenuP261 CEEFAX 2 261 Sat 20 Sip 01:45/51 2/8 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 there are several options that provide protection from early death, such as guarantee periods and spouse's benefits. Annuities can increase each year as a hedge against inflation. Selection of annuity rates 262-267 Sport 300 Wjathjr 400 Front Page 100 CPA min YourMoney City News Main MenuP261 CEEFAX 2 261 Sat 20 Sip 01:45/18 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 her. 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 period, even if the annuitant dies. CPA Rates: Joint Life 264 Sport 300 Wjathjr 400 Front Page 100 CPA min YourMoney City News Main MenuP261 CEEFAX 2 261 Sat 20 Sip 01:51/30 4/8 Escalating Annuities (EA) Annuities can increase 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. Sports news 300 TV/Radio 600 Wjathjr 400 Front Page 100 CPA min YourMonjy City News Main MenuP261 CEEFAX 2 261 Sat 20 Sip 01:59/47 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. Sports News 300 Wrathjr 400 TV/Radio 600 Front Page 100 CPA min YourMonjy City News Main MenuP261 CEEFAX 2 261 Sat 20 Sip 01:05/13 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 bjcausj tax is paid only on a small amount of each payment. Annuity Rates pages 262 to 267 Sport 300 Wjathjr 400 Front Page 100 CPA min YourMonjy City News Main MenuP261 CEEFAX 2 261 Sat 20 Sip 01:40/37 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 better 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: Male 262 CPA Annuity Rates: Female 263 CPA Joint Life Rates 264 Purchased Life Annuities 265 BBC CEEFAX FRONT PAGE 100 CPA min YourMoney City News Main MenuP261 CEEFAX 2 261 Sat 20 Sip 01:16/17 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 be affected bz exact age and choice of benefits. There 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: Male 262 CPA Annuity Rates: Female 263 CPA Joint Life Rates 264 Purchased Life Annuities 265 BBC CEEFAX FRONT PAGE 100 CPA min YourMoney City News Main Menu