Barclays

Annuities

An annuity is an arrangement that aims to provide you with a regular income for the rest of your life in return for a lump sum investment. Usually the earliest you can buy one is when you are aged 55. The Government has ended the effective obligation to purchase an annuity at age 75.

Barclays can help you purchase the right annuity. This is critical, because once you've set it up, it can't be changed.

Maximising your annuity

The amount of income you receive from your annuity depends on:

• The lump sum you use to purchase the annuity
• Your age and health when you purchase the annuity
• Your gender
• Annuity rates when you purchase
• The type of annuity
• Any additional options you choose.

There are ways you can obtain a higher rate than the standard amount offered by your provider. For example, you can transfer your pension fund to a company offering better returns by exercising your "open market option" before you draw any benefits.

If you or your partner are suffering from a serious medical condition, you may be able to purchase an impaired annuity. This usually gives you a better annuity rate, as it is anticipated your retirement may not last as long.

Purchasing annuities

Before purchasing an annuity, you can take 25% of your pension fund which is presently tax-free up to certain limits. Annuity (i.e. pension) income is then taxed at your highest marginal rate.

Types of annuities

• Compulsory purchase annuities:
  These apply when you belong to a defined contribution occupational pension scheme or hold a personal pension plan and are obliged to use your pension fund to purchase an annuity.
• Purchased life annuities:
  You can buy this type of annuity at any time with your own funds. These are not pension-based, although they can be used to provide a retirement income. They are taxed differently to pension annuities.

Annuity options

• Level annuity:
  Pays a fixed annual income for life.
• Escalating annuity:
  Pays an increasing annual income linked either to retail prices or a fixed percentage increase.
• Single life annuity:
  Ceases when the policy holder dies.
• Joint annuity:
  Continues to pay an income to a named dependant when the policy holder dies. This income can be two-thirds or half of the original income.

Find out more about annuities

To learn more about how Barclays could help you plan your retirement, please contact us and we'll be in touch as soon as possible.

Tax treatment will depend on an individual's personal circumstances and may change in the future. Barclays does not provide tax advice. If in doubt we recommend you obtain your own independent tax and legal advice tailored to your individual circumstances.

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