Investment Linked Annuity for Variable and Growing Income
Published / Last Updated on 25/06/2021
Instead of purchasing a guaranteed lifetime annuity via your pension company, open market option or fixed term annuity where the income level and any annual increases are known, you can use a similar route but transfer your pension to an investment linked annuity.
What is an investment linked annuity?
You also have the option of purchasing an investment linked annuity. This is where your annuity payments each year are linked to market linked investments or to the pension provider’s With Profits Fund.
The aim is that by linking your annuity to investment returns you could achieve a higher annuity than a guaranteed one going forwards.
There is usually a guaranteed minimum amount of annuity income payable from an investment linked annuity, which will be less than a guaranteed annuity would pay you. Likewise, there is usually a maximum too.
If investment growth is good, your annuity income will be at or near the maximum annuity payable and may rise, if investment growth is poor or you suffer investment losses, your annuity income will likely to be at or near the minimum annuity payable.
