At retirement you will generally be offered one choice, a lifetime annuity by your pension provider. Some providers however, such as Prudential will also give you a choice of an income choice annuity, which is perhaps better known as a with-profits annuity.
Why would you want an income choice annuity?
If you have other income maybe from investments or you have an occupational scheme then instead of purchasing a guaranteed lifetime annuity where the income is fixed you could opt for the Prudential income choice annuity where the income is reviewed annually. The review could increase the income or decrease the income depending on how the underlying assets have performed.
The income choice annuity is backed by the weight of Prudential’s massive and successful with-profits fund, giving it good potential for growth, and it comes at a time when buying a conventional annuity providing only a fixed income from the outset might not be such a good decision, especially allowing for the ongoing effects of inflation.
You need £10,000 or more (after tax-free cash) to be able to buy the Prudential product. From the outset you select a starting income from within a range that Prudential give you. Your income has the opportunity to grow, by being linked to the performance of our With-Profits Fund. They will also guarantee not to pay you less than a certain amount, known as a Secure Level, no matter how their fund performs.