Individual annuities
Providing your client with a guaranteed regular income for the rest of their life.
We offer both Standard and Enhanced Annuities to the open market.
Our service and strong financials make us a reliable choice for your clients.
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Clients often underestimate how long they will live, and don’t fully realise the value of an annuity, so income planning and support over the long term is essential.
The recent shift towards income drawdown comes with its own risks and challenges, and may not be suitable for everyone.
An annuity can be the right choice for those clients who may require a certain level of guaranteed income.
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An annuity is suitable for clients who:
- Are aged between age 55 and 99 at entry (or age 85 at entry for Enhanced Annuity). Different upper age limits may apply to existing Scottish Widows pension customers.
- Want a guaranteed income for life.
- Don't want their pension to be subject to any investment risk.
- Have a pension fund of at least £10,000 after any tax-free cash and adviser charge. (This limit doesn't apply to existing Scottish Widows pension customers).
- Are resident in the UK or Northern Ireland (excluding the Channel Islands and the Isle of Man) or existing Scottish Widows pension customers.
- Want the option to provide an income for a dependant after their death by purchasing a joint life annuity or a guaranteed period.
- Want the option to protect up to 100% of the amount used to buy the annuity by purchasing value protection.
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Income from an annuity will be treated as earned income and will be taxable.
If your client decides to take a cash sum of up to 25% when they buy their annuity, it’s normally tax-free.
Where applicable we'll deduct tax from each income payment before it's paid.
HM Revenue & Customs will notify us of the relevant tax allowances and we'll take these into account in working out how much tax to deduct.
If your client has a joint life annuity or a guaranteed period and dies before they are 75, any income paid will normally be subject to income tax.
If your client has selected value protection, there are different circumstances you will need to be aware of;
Main annuitant dies under age 75
Annuity bought from uncrystallised funds and the annuity started before 6th April 2024
OR
Annuity bought from drawdown funds and the drawdown started before 6th April 2024.
There is no sum to complete against Lump Sum & Death Benefit Allowance so this total will be NIL.
Annuity bought from uncrystallised funds and the annuity started on or after 6th April 2024
OR
Annuity bought from drawdown funds and the drawdown started on or after 6th April 2024.
A calculation will be completed against the original members Lump Sum & Death Benefit Allowance.
Main annuitant dies over age 75
Lump sum is fully taxable at beneficiary's marginal rate of tax.
Tax rules may change in the future.
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- Once it's set up, your client can't cash in their plan or change the basis of their income, even if their circumstances change.
- When your client dies, their income will normally stop. The total amount paid out may be less than the amount that was originally used to purchase the annuity.
- Your client will receive a lower income during their lifetime if they choose to have an income paid to their dependant after they die.
- If your client chooses an income that doesn't increase or increases at a rate lower than the future RPI, inflation will reduce what they can buy with it.
- If your client chooses an income that is linked to RPI it will vary in line with prices, and in the event of RPI being negative, it could go down.
- If your client transfers from another plan any guaranteed benefits associated with this would be lost on transfer.
- If your client chooses an Enhanced Annuity we may, within six months of your client's annuity being set up, check the health and lifestyle information they supplied in their application. To do this we may ask your client's doctor to complete a report. If the answers to the personal, medical and lifestyle questions are inaccurate or incomplete we may reduce their income.
Please note that charges, terms and limits may change. Tax treatment depends on the individual circumstances of your client and may be subject to change in the future.
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We allow for our charges when we calculate the amount of income offered.
Initial Adviser Charge:
This is an amount that may be agreed between you and your client for advice and services in setting up a new Scottish Widows Annuity. The charge can be either a fixed amount or a percentage of the annuity purchase price. This charge can be taken, after the tax-free cash (if applicable), from the value of the purchase price.Initial commission (Non-advised)
Scottish Widows will pay a percentage of the annuity purchase price for services agreed in setting up a new Scottish Widows Annuity.