Annuity rate meaning

Original news Mr R (CAS-63759-L4H8)—20 August 2024 Summary The Deputy Pensions Ombudsman has dismissed a grievance concerning entitlement to a guaranteed annuity rate. Accordingly, the complaint regarding the payment method tied to the guarantee failed. Under the policy conditions, the guarantee was only available as an annuity paid yearly in arrears. Should the member opt for monthly instalments, the guarantee would not apply. The member’s illustrations were generic projections and did not specify the form of annuity to be selected at retirement. The Ombudsman’s decision underscores the primacy of the policy wording. What were the facts? Mr R was a member of the Phoenix Life Personal Pension Plan (the Scheme) which was operated by Phoenix Life Limited (Phoenix)...

Original news Mr N (CAS-49110-X6N4)—16 August 2024 Summary The Pensions Ombudsman has found in favour of a complaint concerning an insurer’s refusal to allow flexibility around a guaranteed annuity rate. The complainant held two insurance policies, with only one benefiting from a guaranteed annuity rate. To access that guarantee, the insurer insisted he take all of his benefits with the same provider. The Ombudsman concluded that nothing in the policy wording permitted the insurer to curtail the member’s flexibility in this manner. This determination underscores that the contractual terms are pivotal in defining an insurer’s rights and obligations. What were the facts?...

In this issue: Taxation Funding and investment De-risking, buy-outs and mergers Trustees, governance and administration Daily and weekly news alerts Dates for your diary Trackers Taxation Think tank report urges the government to reform pension tax relief to plug the ‘black hole’ in public finances The Labour administration is being urged to revise £66 billion of pension tax relief to generate additional receipts and raise extra revenue in order to help close the gap in the public finances. In a report released on 26 August 2024, the Fabian Society pressed the new government to revamp pension tax relief, with the potential to raise £10 billion per annum. Titled ‘Expensive and Unequal: The Case For Reforming Pension Tax Relief’, the paper set out ideas including a single flat rate for pension tax relief. The report noted that relief on pension contributions hit £66 billion in 2022/23, a 55% rise since 2016/17. However, £22 billion was recouped through...

Legacy or bequest The expressions ‘legacy’ and ‘bequest’ are ordinarily confined to a sum of money or a personal item, though in some situations they can also denote a gift or devise of land. Furthermore, whether a ‘legacy’ encompasses an annuity turns on the context. Sir William Page Wood VC, in Gaskin v Rogers, explained that where a Will merely uses the word ‘legacy’ and directs a distribution amongst legatees, then, unless the face of the Will shows the testator has departed from the word’s settled legal meaning, annuitants are included. He added that the term ‘pecuniary legatees’ does no more than exclude specific legatees—namely, those entitled to particular chattels—and it does not, prima facie, prevent annuitants receiving the same advantage as they would have enjoyed had the Will spoken simply of ‘legatees’ rather than ‘pecuniary legatees’. All such interpretative rules remain subject to the fundamental principle: determine, from the Will read as a whole, what can be gathered of the testator’s intention where the words employed are not...

Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...

From 6 April 2015, members may access ‘flexible benefits’ (defined below) once they reach the normal minimum pension age, without restriction. The requirement to purchase a lifetime annuity has been removed, and individuals can draw on their pension pot via drawdown or by taking one or more uncrystallised funds pension lump sums (UFPLSs). Amounts withdrawn are taxed at the member’s marginal income tax rate, while up to 25% remains available as a tax‑free lump sum. The government introduced these reforms to give members greater control over their finances and to enable them to draw their pensions in the way they choose. For further information, see Practice Note: Pension freedoms—an introduction [Archived]. To ensure members with flexible benefits have enough detail to make informed decisions about accessing their pension pot, from 6 April 2015 changes were made to legislation and to the Financial Conduct Authority (FCA) Handbook rules. These require trustees, managers and providers of occupational and personal pension schemes to supply retiring members with flexible benefits with specific information...