Retirement
Flexible Income Annuity
Combines a guaranteed minimum income with an investment-linked element, so the member keeps some exposure to markets without risking the floor.
Ladies View, Co. Kerry · Marco Ober, CC BY-SA 4.0
Who it is for
Individuals with other assets and a tolerance for variation
What it does
- Guaranteed minimum income for life
- Investment-linked layer reviewed annually
- Income adjustable within a set corridor
- Dependant’s benefits on the guaranteed layer
The product in full
A conventional annuity gives certainty and takes away upside. Drawdown gives upside and takes away certainty. The Flexible Income Annuity is built for the members who genuinely need some of each: a guaranteed minimum income that is theirs for life whatever happens, and an investment-linked layer on top of it that can rise and fall.
The guaranteed layer behaves like a lifetime annuity — it is underwritten, it can carry a dependant’s pension, and it does not go down. The variable layer is reviewed annually against the performance of the chosen funds, and the resulting income can move within a corridor set at outset. The corridor is the important part: it bounds how much the income can change in a year, so a bad year is unpleasant rather than destabilising.
The product is only suitable for a member who has other assets. Variation in income is tolerable when the essential bills are covered elsewhere and intolerable when they are not, and that is a question about the member’s wider position rather than about the product.
Literature
Product literature is issued to appointed intermediaries. Ask your underwriter, or request it through the enquiry form.
- Key features documentOn request
- Fund range guideOn request
How it works
What happens, in order
From the first enquiry to the point the cover, the contract or the facility is in place.
The guaranteed floor is set
Underwritten on the member’s age and health, with any dependant’s benefits attached to this layer. It cannot fall.
The variable layer is invested
From the core or extended fund ranges, chosen by the adviser.
A corridor is agreed at outset
The maximum the income may move up or down at a review. It is what stops a single poor year turning into an income shock.
The income is reviewed annually
Against fund performance, and adjusted within the corridor. The guaranteed floor is never part of the adjustment.
The numbers
A worked example
Illustrative arithmetic, so the shape of the product is visible rather than described. Nothing here is a quotation or a projection.
A £300,000 purchase, and a bad year
Illustrative figures, chosen to show what the corridor does when performance disappoints.
- Purchase price
- £300,000
- Guaranteed layerFor life, and it cannot fall
- £9,000 a year
- Variable layer at outset
- £4,500 a year
- Total income, year 1
- £13,500
- Corridor agreed at outset
- ±10% a year
- After a poor review year, variable layerThe corridor limits the fall to 10% of total income
- £3,600 a year
- Total income, year 2
- £12,150
- Floor below which income cannot fall
- £9,000
Illustrative only, and not a projection. The guaranteed layer is unaffected by any review; only the variable layer moves, and only within the corridor.
Guaranteed floor and variable layer over four review years
The illustrative contract above, through good years and a poor one.
View these figures as a table
| Guaranteed layer | Variable layer | |
|---|---|---|
| Year 1 | £9k | £4.5k |
| Year 2 — After a poor review, held by the corridor | £9k | £3.6k |
| Year 3 | £9k | £4.1k |
| Year 4 | £9k | £4.9k |
Suitability
Where the Flexible Income Annuity fits
The cases it answers, the cases it does not, and what an underwriter needs before quoting.
It is the right answer when
- A member with other assets, who can tolerate an income that varies.
- Someone who wants a hard floor but not the whole pot annuitised.
- Purchases from £30,000, where a blend is worth the extra complexity.
Look at something else when
- A member whose essential spending needs every pound of the income — a lifetime annuity is the honest answer.
- Someone who wants a single, unchanging figure and no annual review.
What we need to quote
- 1.Date of birth, health information and the purchase price.
- 2.The split between guaranteed and variable layers, and the corridor.
- 3.Fund selection, and any dependant’s benefits for the guaranteed layer.
Questions
What brokers ask us about this product
Can the total income fall below the guaranteed layer?
No. The guaranteed layer is a lifetime commitment and is never reduced at a review. Only the variable layer moves.
What sets the corridor?
It is agreed at outset and stated in the contract. A narrow corridor makes the income steadier and damps the upside as well as the downside.
Is this drawdown?
No. Drawdown pays out of a fund that can be exhausted. Here the guaranteed layer is an insured income for life, and only the layer above it is investment-linked.
Request information
Ask us about the Flexible Income Annuity
The form reaches an underwriter in Dublin. If you are an intermediary, say so and we will route it to the broker desk.