The following Pensions guidance note provides comprehensive and up to date legal information covering:
Before 6 April 2015, members entitled to money purchase or defined contribution (DC) benefits had limited retirement options, namely:
getting a scheme pension
buying a lifetime annuity
The purchase of a lifetime annuity was the most common retirement option, especially as the other two options were only available:
if the member's scheme permitted them (a rare thing in practice), and
in the case of drawdown, if the member satisfied certain conditions
On 6 April 2015, pension flexibilities were introduced to widen the retirement options available to DC members and members with other 'flexible benefits' (eg members with cash balance benefits). Not only did drawdown become more widely available, but it is also possible for members with flexible benefits to take their pensions pot as one or more lump sums, known as 'uncrystallised pension fund lump sums'. For further information, see Practice Notes: DC pension flexibilities from 6 April 2015—what is involved? and Uncrystallised funds pension lump sums (UFPLSs).
This Practice Note considers annuities, their regulatory and legal regime, as well as the impact the pension flexibilities introduced on 6 April 2015.
An annuity is a type of insurance contract which, in return for the payment of capital, entitles the annuitant to a guaranteed income until death (although some annuities may be set for a fixed period
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