A Unit Linked Annuity

Last updated: 20/03/2014

A Unit Linked Annuity is very similar to a With Profits Annuity but instead of using a With Profits investment fund you can use a wider range of unit linked investment funds.

The initial pension and future income levels are also dependant on the performance of the underlying unit-linked investment funds.

Often the investor is allowed to assume a future rate of growth.

The higher this assumed rate the greater the initial income, however if the actual growth does not match this rate then the amount of pension payable will decrease.

What are the advantages of a Unit Linked Annuity?

You will receive an income for life, and you can elect for your spouse/civil partner/dependant to receive an income upon your death.

Tax-free cash is available at outset.

You still have some investment control in respect of your pension funds.

What are the disadvantages of a Unit Linked Annuity?

The selected income level is not guaranteed and is subject to future investment returns.

Charges will be higher than under a non-invested Lifetime Annuity.

Any options to provide benefits on death must be selected at outset and will result in a lower initial pension payment.

These selected benefits cannot be altered in the future.

You lose control of your pension funds.

Inheritance Tax could be payable on any annuity payments paid to your estate after your death.

Will a Unit Linked Annuity be the most suitable choice for you? Talk to an adviser to find out.