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Future investments with fixed term income plan

Fixed Term Income Plan - John

Case Study: Taking your tax-free cash, and a fixed term income
“I just need a fixed income for a few years”

John

  • Is aged 61
  • Is reducing his hours of work
  • He has a pension pot of £100,000 (after tax-free cash)
  • Wants a temporary guaranteed income
  • Looking to fully retire at the State Pension age of 66 

A retirement solution

John has recently reduced his hours at work and is looking for a secure income to supplement his earnings until his State Pension becomes available at age 66.

He doesn't want to purchase a lifetime annuity at the moment but would like to access his tax-free cash. He decides that he needs an income of £5,000 for each of the next five years and also opts for a guaranteed maturity value (GMV) at the end of the term. "I just need a fixed term income for a few years" he said.

The GMV will provide John with a lump sum that he can use to purchase a lifetime annuity, transfer into a flexi-access drawdown or take as a taxable lump sum.

With the CanRetire Fixed Tern Income Plan (FTIP), John can access his tax-free cash and provide a guraranteed income. John can choose the level of income, in this case £5,000 a year for five years, with any balance providing the GMV which will be known from the start of the Plan. 

Key Benefits:

  • Choose the term between 1-20 years
  • Select income and/or growth options
  • Have a level or escalating income (0.1% - 10%) each year
  • Take up to 25% cash at outset
  • Provide a death benefit for beneficiary(ies)
  • Reassess options at the end of the term

How it Works

The figures used in this example are for illustrative purposes only.

  • You invest £100,000 in a pension pot for five years
  • You receive an income of £5,000 each year for five years (£25,000 over fixed term)
  • At end of fixed term, you receive a guaranteed maturity value of £80,000

Risks

The FTIP does not pay an income for life and where a Guaranteed Maturity Value (GMV) is paid at the end of the term this may not be enough to provide you with the same level of income had you bought a lifetime annuity at outset rather than investing in the FTIP.

Any income taken from the FTIP will reduce the amount that can be paid into a money purchase pension each tax year to £10,000. This is known as the Money Purchase Annual Allowance (MPAA).

Who is it suitable for?

  • Aged 55 or over
  • Have a minimum of £10,000 to invest (after tax-free cash)
  • Want guaranteed income and/or growth for a fixed term
  • Those looking for a level or escalating income (0.1% - 10%)
  • Want to access their tax-free cash at outset
  • Want a death benefit for the beneficiary(ies)

You should speak to a professional adviser to ensure that FTIP is suitable for you.

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.