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Can my pension annuity income fall on spouse's death?

Retirement | Annuities Helpful? 2

Asked by molyned, submitted 31 May 2013.

Open Quote Can I have the annuity income reduce to (say to 60%) upon the death of either my wife or myself?

I am assuming when quoted for a joint life annuity the selection of payment % is dropping the income only on my death and not my wifes. Also assuming that their is a higher income in electing for this approach if available.
End Quote

Answered by Justin on 23 August 2013

You are right in theory, initial annuity income would probably be a little higher, but this kind of pension annuity is not available in practice.

When a surviving spouse annuity income option is selected, this only kicks in on the annuitant's death, i.e. there is no option to reduce your pension income should your wife die before you.

If you want more flexibility you could consider leaving your pension fund invested and draw an income instead. Income limits are 0% - 120% of a typical pension, broadly based on a single life level annuity as calculated by the Government Actuary Department.

Whether income drawdown is appropriate largely depends on whether your pension scheme allows it, whether you are comfortable with the potential risks involved and whether it is cost effective and practical based on the size of your pension fund.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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