RPSM09102240 - Technical Pages: Member benefits: An unsecured pension: Short term annuities: Guarantees

This guidance only covers members who became entitled to an unsecured pension before 6 April 2011. See RPSM09103500 if pension entitlement arose on or after 6 April 2011.

Guaranteeing a short-term annuity contract

A short-term annuity contract may be guaranteed for its full term. So the contract may allow the payment of the annuity for its full term, even if the member dies within that period. However a short-term annuity contract does not have to provide such a guarantee.

Guarantees are explained in more detail on RPSM10104050. RPSM10104060 explains why an unsecured pension entitlement as a whole cannot be guaranteed in this way (so why income withdrawal cannot be guaranteed).

The fact that a series of short-term annuity contracts have been guaranteed does not mean that a lifetime annuity contract (or scheme pension) subsequently purchased (or provided) from the remaining unsecured pension fund cannot be guaranteed as well (up to the maximum ten years).

RPSM09102120 deals with the taxation of such continued payments.