Fixed Fee Annuities from Cavendish Online
Cavendish Online is the only "nil-commission" discount broker in the UK. We give back all of the commission wherever possible.

This means that if you use Cavendish Online to set up your annuity we will give you all of the commission back in the form of a cheque. This ‘cash-back’ is usually 1-1.5% of the amount used to purchase the annuity.
 
To apply for your annuity via Cavendish Online you will need to know the value of your pension fund and the options that you wish to choose for your annuity. Please complete the following form and submit it to Cavendish Online. We will then arrange a quotation for you and email it to you within 48 hours.

We use all the major annuity providers and you can preview the effects of the different annuity options on the FSA website HERE. In practice this will also show the best providers and you can state your preference in the quotation form below if you so wish. In summary the highest initial income would be from a level annuity just on your life without any guarantee. If you add escalation (fixed or inflation (RPI)), a guaranteed period (5 or 10 years), a dependent’s benefit (100%, 66% or 50%) the starting annuity will decrease. It is worth spending a little time trying the different options on the FSA websiteyouto see the effects of the options.

You will then need to print off the relevant application forms and return them to Cavendish Online along with our fee of £50.00 and client declaration.

We will then forward these to the company concerned and arrange for the plan to be set up with the commission paid to Cavendish Online (this is unusual for Cavendish Online, as we normally reinvest all of the commission). Once the annuity is complete we will receive the commission from the insurance company and forward this to you.

What is an Annuity
A compulsory purchase annuity (CPA) is the regular income that you buy with the money from your pension at retirement. Usually people opt to take 25% of their pension pot as tax free cash and use the remainder to purchase an annuity – which is guaranteed for the rest of their lives.

A purchased life annuity (also available from Cavendish Online) is an annuity purchased with your own capital and, because a part of it is treated as a return on capital, is taxed less than a CPA.

With Profits & Unit Linked annuities
A standard annuity is guaranteed for the life of the applicant. This means that it will not go down and will increase in line with any options selected at outset (e.g. indexation). The income from a With Profits or Unit linked annuity will vary depending on the value of the underlying assets.

Glossary of Option Terms

Single Life - The income will be paid throughout your life only. When you die the income will cease. If you're in a relationship where you are financially dependent on each other, you should strongly consider choosing a joint life annuity which continues to pay an income to your spouse or partner, and consider how they would cope financially if you die first.
Joint Life - You can choose for the income to continue being paid to your surviving partner after your death. You can choose up to 100% of the income to continue being paid.
If you have protected rights money in your fund and married, separated or in a civil partnership, a 50% spouse's income for your protected rights must be chosen.

Increase options
Level - The amount of income paid will remain level and not increase. Although the income may be higher initially, you should bear in mind the effects of inflation over time.
Increase with Inflation (RPI) - You can choose for your income to move in line with the Retail Price Index (RPI), meaning your income will keep track with inflation and therefore retain its buying power.
Increase by fixed percentage - You can choose for your income to rise by a fixed percentage each year (such as 3% or 5%).

Guarantee

No Guarantee Period - Unless you have selected a joint life annuity the income will stop upon your death, even if you die shortly after taking the annuity.
Guaranteed Period - You can choose for the income to be guaranteed for a period of time (normally 5 or 10 years). This means that if you die within this time the income will continue to be paid for the remaining period to a spouse or dependent .

Advance or Arrears
Payment Period in Advance or Arrears - This means you receive your first payment straight away or you wait until the end of the chosen payment period. You can choose for your income to be paid monthly, quarterly, half yearly or annually.

Protection
No Protection - If you die before age 75 and have a single life annuity with no guarantee period, no further money will be paid out.
Protection - This protects the 'capital' of your annuity if you die before age 75. If you die before the total gross income exceeds the amount of the fund used to buy the annuity, the balance will be paid less a 35% tax charge. Please contact our helpdesk for a quotation including value protection.

In summary
The options you choose will affect the level of income you receive from your annuity. For instance, by choosing an income that remains level you will receive a much higher initial income than by choosing an income that increases over time. Take a few minutes to try out different options on the FSA website to see what effect these will have on your income.