Short or Fixed Term Annuity
Published / Last Updated on 24/06/2021
What is a Short or Fixed Term Annuity?
You can choose to transfer your pension funds (before or after tax free cash has been taken) to another pension provider and purchase a short term annuity.
This is where you take any tax-free cash at outset and use part (or all) of your fund to buy a temporary annuity lasting for any number of years to provide a secure income (usually 5 or 10 years but can be 20 years or more). The part of your pension fund not used remains invested to grow.
It is usual to be offered a guaranteed maturity value for the portion used for the short-term annuity when it matures. This can then be used to repeat the process (alongside any pension fund not already used) and buy another short-term annuity or to choose another retirement option at that point.
Short term annuities are flexible if you have changing income needs over the coming years.
