This type of annuity takes a client's pension fund and converts it into a regular income. Unlike a conventional annuity, the amount paid can vary as there is potential to receive more or less income, depending on how investment funds perform (though there is usually a minimum income below which it cannot fall).
Where is the money invested? The investment is typically made into a 'With-Profits' fund which pools client's funds together and, in times of growth, sets aside some of the fund to offset times where the fund may otherwise decrease.
When considering this type of annuity, you should ensure that you take into account the provision that needs to be made in case the income were to fall.
Just Retirement does not currently offer investment linked annuities.
The table below briefly explains some of the pros and cons of this type of annuity.
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Investment Linked Annuities
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| Pros |
Cons
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| If the value of the selected provider's fund increases so will annuity income in retirement. |
If the value of the selected provider's fund falls then so will the income, your client will need to ensure that they can live on a lower income for a prolonged period of time. |
| By setting the anticipated rate of return on the investment, the initial income can be tailored to suit individual circumstances. |
The income is not guaranteed and may be subject to higher administration charges.
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| Choosing a lower income initially may give potential for an increased income in the future, depending on investment performance. |
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Useful Links Annuity Options
Annuity Underwriting