Annuity (Longevity) Insight UK

This Insight is a work in progress and this article will be edited as changes are made. 

The Annuity Insight is designed to show how annuitising some or all of a client's money purchase pensions effects long term outcomes in respect of cash flow, assets and legacy.

Background: The Insight uses the Annuity Assumed Interest Rate from Dashboard > Plan Settings.

It is a Single Life Annuity and its not Capital Protected.

The annuitisation will take place at the Retirement Event.


Select Insights >Longevity Risk (Annuity)

1. From Purchase Annuity For select the name from the drop down, this determines the total money purchase pensions available. If a client has more than one money purchase pension, the figure shown is the total of the pensions. 

2. Use the slider to determine the percentage of the total pensions that should be annuitised. The figures displayed are the values of the money purchase pension(s) at the start of the retirement year based on the growth rate/asset allocation used in the selected plan.

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3. Where model portfolios are available (set at Subscription level), use the Asset Allocation slider to select the asset allocation to grow the money purchase pension(s) for the Insight.  NOTE: the Insight does not use the asset allocation modelled in the pension(s) as they may be different. If an asset allocation is not chosen by using the slider the Insight, by default, uses the lowest risk model portfolio available. This information is correct at the time of writing and may be subject to change. 

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Where an entered growth rate has been used to grow the pension(s), and where model portfolios are available (set at Subscription level), the Insight will use model portfolios and it is necessary to select the model portfolio using the Asset Allocation slider.  This information is correct at the time of writing and may be subject to change. 

Where model portfolios are not available, this message will appear and the pension(s) grow at the entered growth rate.Annuity Insight 3.png

4. The Market Conditions Slider, is also not available when there are no model portfolios available (set at Subscription level).

Moving the slider up or down will change the growth rate from the expected average. 

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5. Select Get Started to run the Annuity Insight.

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At the Retirement Event the selected percentage of the total pensions is annuitised. The amount crystalised will include 25% tax free cash. 

6. In the Results box, the Estimated Annuity Income represents the annual annuity income at the Retirement Event. The Estimated Secure income is the total income including the annuity, state pensions and final salary pensions at the Retirement Event. This can include any final salary or state pensions from the second party if they are in payment at this time. Estimated Estate Value is the total value of the selected person's estate at the planned legacy. This can be checked from Overview > Legacy.


7.  The Insight will produce a Cash Flow chart by default. The other charts are available to view.   It is possible to select Details and Year View as usual, to inspect what has happened. 

8. The Annuity Insight allows you to generate a What if Plan using the results. 

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9. Go to Dashboard > Pensions > where you will find the Annuity created by the Insight. It is possible to make amendments here e.g. escalation type. 

10. Within the Insight there is also the possibility to extend the mortality event up to 10 years from the one modelled. This is to help  assess the advantages/disadvantages of purchasing an annuity on the overall cash flow, wealth and legacy. Use the Live Longer slider to do this. The Estimated Annuity Income and Estimated Secure Income will remain the same. The change may be within the Estimated Estate Value.  Its important to note that this represents the value of the selected person's estate at the new mortality, the other party to the plan's mortality will remain as originally modelled. 

10. Select Compare Plans in the top right to compare the Insight results with the Base Plan or other What if and compare the different chart types. 


This Insight is a work in progress and this article will be edited as changes are made.