PTM072340 - Death benefits: types of pension: dependants' drawdown pension: 诲别辫别苍诲补苍迟蝉鈥� short-term annuities (up to 5 April 2015)
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Glossary |
Paying a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity
Taking a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity and income withdrawal from the same pension scheme/arrangement at the same time
The maximum 诲别辫别苍诲补苍迟蝉鈥� short-term annuity payable
Reviewing a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity
What happens at age 75?
Note: The guidance on this page relates to short-term annuities taken out before 6 April 2015. See page PTM072420 for guidance on short-term annuities taken out on or after 6 April 2015 and for taxation details.
Paying a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity
Paragraph 20 Schedule 28 Finance Act 2004
The Registered Pension Schemes (Transfers of Sums and Assets) Regulations 2006 - SI 2006/499
Part of a 诲别辫别苍诲补苍迟蝉鈥� drawdown pension fund can be used to buy a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity contract from an insurance company of the dependant鈥檚 choice. A 诲别辫别苍诲补苍迟蝉鈥� short-term annuity contract will pay a fixed amount each year. The contract can last for up to five years and does not have to come to an end when the dependant reaches age 75.
Taking a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity and income withdrawal from the same pension scheme/arrangement at the same time
A dependants鈥� short term annuity and income withdrawal can be taken from the same scheme/arrangement as long as the scheme rules allow it.
The maximum 诲别辫别苍诲补苍迟蝉鈥� short-term annuity payable
There is no minimum amount. If a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity is purchased from a 诲别辫别苍诲补苍迟蝉鈥� drawdown pension fund to which flexible drawdown applies, there is no upper limit on the amount the 诲别辫别苍诲补苍迟蝉鈥� short-term annuity can pay.
Where a 诲别辫别苍诲补苍迟蝉鈥� short term annuity is bought using funds from a 诲别辫别苍诲补苍迟蝉鈥� capped drawdown pension fund there is an upper limit on the amount the short-term annuity can pay. The amount payable from a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity contract plus the amount of any income withdrawal from the 诲别辫别苍诲补苍迟蝉鈥� capped drawdown pension fund in a pension year cannot be more than the maximum 诲别辫别苍诲补苍迟蝉鈥� drawdown pension.
Reviewing a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity
A 诲别辫别苍诲补苍迟蝉鈥� short-term annuity can be for a period of up to five years. However if the dependant is using 诲别辫别苍诲补苍迟蝉鈥� capped drawdown, the maximum drawdown pension will be reviewed:
- at least every three years if they are under 75, and
- every year when they are 75 or older.
What happens at age 75?
The 诲别辫别苍诲补苍迟蝉鈥� short-term annuity can continue past the 75th birthday. The dependant can also buy a 诲别辫别苍诲补苍迟蝉鈥� short-term annuity when they are 75 or older.