Annuity Calculator

This calculator will show the estimated income from a crystallised pension and selecting an “Annuity” income option on retirement. We create these calculators for our students and their studies. The accuracy of these tools should not be used to make financial decisions. Clarity Financial Training Ltd will not be liable to you or anyone else for any decision made or action taken in reliance on the information given by these online tools.

Annuity

A Lifetime Annuity is a secured pension option on retirement. It is a lower risk strategy as the income remains payable for life. There is no investment risk as the Life Assurance company will pay an income to the annuitant based on the value of the fund at time of purchase and the annuity rate based on the annuitant’s age. The whole pension is crystallised, and the retiree can take the PCLS (25% of the fund*) tax free and the remaining fund is used to purchase the annuity. Ideal for cautious clients as the money will not run out. Income from a level annuity is vulnerable to inflation risk.

*Note: The maximum tax free lump sum is £268,275.00

Annuity features:

• Level annuity: The same income (level) is paid for the rest of the individual’s life, ceases on death.
• Escalating annuity: A 3% escalating annuity will increase the payments annually, this is paid for the rest of their life. Helps to keep pace with inflation.
• Guaranteed: A guaranteed term for 10 years where the income will be paid for a guaranteed period from the annuity starting, even if the annuitant dies before the end of the guarantee.
• 100% Joint life annuity: A joint-life annuity provides an income for the life of the annuitant, but then transfers to the spouse and pays them a regular income for the rest of their life. The income can be a proportion of the original amount such as 50% or 100%. This must be stipulated at the time of purchase.