Income Choice Annuity in more detail

This page gives an overview on how Income Choice Annuity works - you can refer to our marketing literature for more details on this product.

Your clients' income

As with any annuity, the income your client can take is based on several things, including the size of their pension fund when they buy their annuity, their age, and the options they choose.

An income range

When their Income Choice Annuity starts, your client can choose their starting income from an income range we give them. Currently, the bottom of their range is based on a Required Smoothed Return of 1% a year and the top of their range is based on a Required Smoothed Return of 6% a year.

When your client chooses their income, we tell them the Required Smoothed Return they will need to keep getting that income over the life of their annuity. We show your clients' Required Smoothed Return in their quotation and in their annual statements. On their policy anniversary, we compare your client's Required Smoothed Return with the actual Smoothed Return we announce for them. This will then affect their income for the following year. If their Actual Smoothed Return is:

• the same as their Required Smoothed Return, their income for the following year stays the same.
• higher than their Required Smoothed Return, their income for the following year goes up.
• lower than their Required Smoothed Return, their income for the following year goes down.

We review your clients' income every year and we show their income for the next year on their annual statement. We start to pay them their new income on, or after, their next policy anniversary dependent on the payment frequency they have chosen.

Secure Level

We guarantee that your client's income will never fall below a certain amount. We call this amount the 'Secure Level'.

The Secure Level is set at the lowest amount available from the income range offered to your client when their annuity starts. So, if the lowest amount they could have taken at the start of their annuity was £3,000, their Secure Level will be £3,000. Their Secure Level will remain level.

Adviser commissions

You and your client can agree commission. You have a choice of Initial or Annual Commission, or a combination of both.

You can agree an Initial Commission of up to 3.5% of your clients' original pension fund less any tax-free cash. Or, you can take an Initial Commission of up to £500 if it is greater than 3.5% would be. We take this Initial Commission from your clients' pension fund before we set their starting income range. We pay it within 14 days of the start of their annuity.

We can also pay an Annual Commission of up to 0.5% of your clients' original pension fund - less Initial Commission and any tax-free cash. We take an amount to cover Annual Commission payments from your clients' original pension fund. We pay you this commission as a level amount annually.

For more information or simply to request a quotation, call us on 0808 234 5100 (option 1) or email our team at pruannuities.contactquotes@prudential.co.uk

Lines are open from 8.30am to 6.00pm Monday to Friday. We may monitor or record calls for quality and security purposes.