Third Way Annuities

Published / Last Updated on 29/06/2021

Third way annuities are not annuities in the traditional sense.

They are actually a form of Unsecured Pension (still invested and can rise and well as fall in value) with some built-in guarantees.  A third way annuity will usually offer a guaranteed annual income for a fixed period, which might be a set number of years or, in some cases, until you reach a particular age (e.g.  age 75).

You can choose to transfer your pension fund to another provider (or remain with your existing provider) and utilise ‘third way annuities’. 

Third way annuities are very similar to short term annuities and they tend to be a middle ground between Capped Drawdown and buying a lifetime annuity. 

Some providers write the third way annuity under annuity pension rules and others under Income Drawdown rules.  This means that taxation routes may differ but ultimately, the tax paid for the same income (either route) should be the same.

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