What Types of Annuity are there?

There are different types of lifetime annuity to suit your needs and circumstances. The basic types are:

• Single life – an annuity just for you if you don’t have a spouse or partner, or if they don’t rely on you for income (for example they have their own pension arrangement);
• Joint life – an annuity that will pay out to your spouse or partner after your death (normally at a reduced rate), if you have a spouse or partner who relies on you for income.

You can also choose whether you want your single or joint-life lifetime annuity to be:

• A level annuity – this pays out the same pension income throughout your life. You will get more money to start with than you would from an escalating lifetime annuity, but it will not increase in line with inflation;
• An escalating annuity – there are two main choices:
• Fixed-rate – your income increases each year by a fixed rate (for example 3%); or
• RPI-linked – your income goes up or down in line with inflation. An escalating annuity will normally start at a lower rate than a level annuity and gradually build up.

You can also add some options to your lifetime annuity, such as a “guarantee period”.

• You can ‘guarantee’ your lifetime annuity for a specific number of years. This means it will continue to pay the income for the rest of the guarantee period (5 or 10 years) even if you die before the time period is up. The income is usually paid to your partner or to your estate if it is a single life annuity.