Spouse's Benefits and Annuities
A single life annuity is an income for just one person. This will provide the greatest level of income. But, if you're married or have a partner, you might want to consider building in some sort of spouse's pension within your annuity. Doing so will reduce the initial income, but it does ensure that your spouse or partner will have an income in the event of your death.
You can opt for any percentage of spouse's pension, you want, up to a maximum of 100%. (The new rules from April 2015 mean the income is paid tax-free if death occurs before age 75, and taxed as income for the beneficiary if death happens after age 75. See annuity death benefits for more details).
A 100% spouse's pension would mean that, in the event of death of the annuitant (the person whose money buy's the annuity), the income would continue at the same level for a spouse or partner.
A 50% spouse's pension would mean that the income would halve in the event of the annuitants death.
The drawback to including a spouse's pension would be that the initial level of income would be lower and the greater the percentage, the lower the income.
One other key point to consider is that if your spouse were to die before you, then you would have received a lower income and they will not benefit from it.
There are three other options which provide some protection for a spouse, rather than choosing a spouse's pension, all of which have their advantages and disadvantages. Opting for:
If you can't find the information you're looking for on the website, or you want to know more or have a question, or just want to chat through some details about your pension then please feel free to contact us, without obligation. Either contact us online or call 0800 011 2713.