RPSM09102070 - Technical Pages: Member benefits: An unsecured pension: Overview: Purchase of a lifetime annuity

This guidance only covers members who became entitled to an unsecured pension before 6 April 2011. If the member became entitled to their pension on or after 6 April 2011 then see the guidance at RPSM09103500.

Partial vesting: purchase of a lifetime annuity or provision of a scheme pension

Purchase of a lifetime annuity contract

An unsecured pension fund may be used to purchase a lifetime annuity contract at any time. As with additional fund designation, this does not need to be a one-off switch and a staggered approach to lifetime annuity provision can be taken. So a member can choose to use only part of the unsecured pension fund to purchase a lifetime annuity contract. The purchase of a lifetime annuity reduces the size of the unsecured pension fund and so triggers a review of unsecured pension limits.

Where a lifetime annuity contract is purchased, that contract may still be guaranteed for a period of up to ten years (see RPSM09101780).

Provision of a scheme pension

The same principles apply equally where the money purchase scheme gives the member the option of applying unsecured pension fund to provide a scheme pension.