Invested Annuity

Concise overview describing Invested Annuities

With Profits Annuities – Invested Annuities

Unlike a traditional annuity this type of scheme depends on the performance of funds invested annually. There is a minimum guaranteed level of income, which will be paid no matter how the fund performs.

At the beginning of the plan the annuitant usually receives a higher starting income. The fund has an Anticipated Bonue Rate (ABR), this is a level of required fund performance, or the amount the fund must grow each year to maintain the starting income. The value is between 0 and 6%.

At a glance – What is an invested annuity?


Usually offers the highest starting income

 Income rate can increase or decrease

 Income has a guaranteed minimum

 Death benefit options

 Health problems factored into plan

With Profits Annuity – What Are The Right Choices?

Traditional annuities and with profits annuities feature the same set of death benefits. Further information regarding spousal and dependent pension guaranteed periods can be read here.

Options – Decide how your income is paid

There are similarities between traditional and with profit annuities regarding payment period selection. With profit annuities do not feature what is referred to as escalation on income. (This means that the income will not rise with inflation and as WPI’s are dependent on fund performances).

Anticipated Bonus Rate – Deciding on the value

The Anticipated Bonus Rate is a target of growth for the fund which determines if the starting level of income is maintained, increases or decreases. The lower this value is set, the lower the starting income will be. Setting the value high will raise the starting income considerably, though it is important to consider that funds may not perform at high levels year on year. A low performing period would see a decline of your annual income from the scheme.