With Profits Pension Annuity

Returns earned by the With-Profits Fund are added to your pension annuity income through bonuses. Essentially, the bonuses represent your share of the profits in the fund. There are two main types of bonus that can be applied to your income: a regular and an additional bonus.

Regular Bonus

• We confirm regular bonus rates once a year.
• The regular bonuses may increase the guaranteed minimum income for your plan.
• The investment returns we expect in the long term will be an important influence on regular bonuses. For example, if we expect future investment returns to fall, we may reduce the regular bonus, even if total returns in recent years have been higher.
• Please remember that the level of regular bonuses can go down as well as up and there are no guarantees that regular bonuses will be applied in the future.

Additional Bonus

• Depending on the returns earned by the fund to date, we may pay an additional bonus. Along with the regular bonus, this will determine your income for the year.
• We review the additional bonus at least twice a year, but possibly more frequently.
• The additional bonus rate is likely to change more frequently and by a greater amount than the regular bonus rate.
• The additional bonus rate is not guaranteed and may change at any time.

Anticipated Bonus rate

At the start of the plan, you choose an Anticipated Bonus Rate of between 0% and 4% in 0.25% steps. When choosing your Anticipated Bonus Rate you are in effect predicting (or 'anticipating') how well you think our With-Profits Fund will perform and the level of bonuses you will receive. If the bonuses declared are higher than the Anticipated Bonus Rate you have chosen, your income will increase. If the bonuses are lower, then your income will decrease. After 12 months you have the option of increasing or decreasing your Anticipated Bonus Rate within the range available at that time. To give you peace of mind, we also provide a guaranteed minimum income which guarantees that your income will never fall below a minimum amount. This is the amount of income you could have bought at the start of the plan on an Anticipated Bonus Rate of 0%.

If you change your anticipated bonus rate we will recalculate your annuity.

You can find out more about how this annuity plan works in a guide to your With Profits Pension Annuity Investment and how we manage the With-Profits Fund (PDF 143KB).

WC01054 01/2012