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Secure Income

Secure Income Option

Shop around, the cost of a secure income (or annuity) can vary a lot.

You can use all or part of your fund to buy an income for life from an external provider. Your funds are transferred to the new provider to meet the cost and are no longer invested for you. The cost of the income will vary from time to time, usually reflecting long term interest rates. Tax is payable on the income you receive at your normal marginal rate.

You will need to take some decisions about the type of pension you want to buy which will include:

  • Whether you want to provide a pension for a spouse or dependant on your death.
  • Whether you want your pension to increase with inflation.
  • Whether you want the payment of your pension to be guaranteed for a period of time (even if you die prematurely).
  • Whether you are in ill health. This includes many common illnesses, not just life threatening ones. Ill health usually means you get a higher pension.
  • How frequently you want your pension paid.

Different types of products are available and it is really important that you take financial advice or understand the details as your decision may have a significant impact on your future income. The cost of buying a pension income varies between providers and so it is important that you get the best possible rate.


Things to think about

  • How you should invest your fund as you approach retirement. Go to our investment pages for more help on choosing the right investment option for you.
  • Buying a secure income is a long term decision and will affect your retirement income usually for the rest of your life.
  • You may be able to sell your income in future but the terms for this are currently unknown.
  • The cost of buying the income will be determined by interest rates at the time you retire and assumptions made by the provider about how long you are likely to live. If you die prematurely, a secure income may not be good value for money.
  • If you buy an income which increases with inflation, the cost will reflect current inflation expectations. These might be higher or lower than actual inflation over a period and may or may not represent good value for money.

We strongly recommend that you use the Pension Wise service provided by the Government and take independent financial advice where appropriate.


The information on this page is provided in good faith but is not legal or financial advice or binding on the Trustee. The trust deed and rules will override in the event of any inconsistency.

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