There are a number of different types of guaranteed incomes for life. Find out more about them with our
guaranteed income guide
An ‘escalating’ guaranteed income increases over time to keep up with the increasing cost of goods and services, known as inflation. Your income will start at a lower level and will increase by your chosen amount each year.
A ‘level’ guaranteed income will remain fixed. But as you get older, inflation may increase therefore you can buy less with the same income.
If you smoke, have high blood pressure, are on prescribed medication or have a medical condition, you may be eligible for an ‘enhanced’ guaranteed income (also known as an ‘impaired’, ‘lifestyle’ or ‘underwritten’ annuity). These tend to pay a higher amount of income on the basis that your life is expected to be shorter and so the income will not be paying out for as long.
A guaranteed income that provides an income just for you is known as a ‘single life annuity’.
Some guaranteed incomes can provide an ongoing income for a nominated dependant should you die.
These plans (known as ‘joint life annuities’) provide a slightly lower income initially but payments will continue to your dependant after you die or for a guaranteed period.
You could also consider protecting your annuity payments through ‘Value Protection’. Value protection is an option that, if the customer dies without having received the full value of their pension fund, returns a lump sum (minus total gross payments made and tax). As a result, value protection gives the ability to protect up to 100% of the original pension pot.
If you’re unsure about any of your options and would like to find out more about your workplace pension with Fidelity, please contact us.