RPSM09300060 - Scheme Administrator Pages: Member benefits: Pension benefits

This guidance only covers pension entitlements that arose before 6 April 2011. See RPSM09103500 if the member became entitled to their pension on or after 6 April 2011.

A short term annuity contract

The member may choose to secure part (or all) of their unsecured pension through the purchase of a short-term annuity contract from an insurance company.

Unlike with income withdrawal the unsecured pension secured through that contract will be paid direct by an insurance company to the member. The unsecured pension fund held in the arrangement will be reduced by the purchase price when the contract is purchased.

The term of the annuity contract cannot be more than five years, and the annual amount payable by the contract is bound by the same rules as income withdrawal payments paid direct from the scheme to the member. If the annuity was purchased before 22 June 2010 the term of that annuity must not extend beyond the member’s 75th birthday.