Purchased Life Annuity

The Prudential Purchased Life Annuity lets your client exchange a cash lump sum from personal savings or investments, including a pension commencement lump sum, in return for a guaranteed income for life. For a full description of the Prudential Purchased Life Annuity please see our Key Features document.

MINIMUM ANNUITY INVESTMENT

Your client can buy a Prudential Purchased Life Annuity if they have £30,000* or more to invest, and they are aged between 50 and 85.

*Please note that we cannot accept money from a structured settlement, from the proceeds of somebody's will, from somebody who is resident overseas or from a third party on someone else's behalf.

Benefits of our Purchased Life Annuity:

• Provides a known and secure level of income, allowing clients to easily budget their spending against their income.
• If your client arranges joint-life terms, their dependant will also receive an income for the rest of their life if your client dies first.
• If your client selects the guarantee option, benefits can be guaranteed to be paid for up to a period of 10 years.

Risk factors

• Inflation can reduce the spending power of your client's income in the future, especially if they choose a level income.
• When your client dies, the income payments will stop unless they choose the joint-life option and/or the payment guarantee option, and the income payments are eligible to continue under either of these options.
• The options you choose may mean your client will need to accept a lower staring income.

The Purchased Life Annuity is taxed differently from pension annuities. Currently HM Revenue and Customs splits the income from your client's Purchased Life Annuity into two proportions, which are taxed differently.

The Exempt Proportion:

This proportion of your client's income represents the repayment to your client of part of the capital they invested in the Purchased Life Annuity. In effect they are getting their own money back - so it is paid without tax being deducted.

The Taxable Proportion:

This proportion of your client's income will be taxed as unearned income, in line with current tax law and tax rates. Normally Prudential deduct the savings rate of tax and pass it to HM Revenue & Customs, before we pay your client's income. Your client must declare this investment income on their tax return.