Frequently Asked Questions

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You asked: How is my pension income calculated?

With Profits Pension Annuity customers only

When you first take out your annuity, you have to choose what's called an Anticipated Bonus Rate (ABR). This determines the income you'll receive for the first year. You could have chosen an ABR rate of between 0% and 4 or 5% in steps of 0.25%, depending on when you started your annuity.

Every year afterwards, your income will be determined by the ABR you've chosen and any bonuses that we declare. Two types of bonus can be added to your plan: a regular bonus and an additional bonus. Any additional bonus will only apply for the year.

Each time your plan anniversary (the anniversary of when you first took out the annuity) comes around, we calculate what your basic pension income will be for the coming year. We won't change your pension income more than once a year.

To do this, we compare the ABR you've chosen with the regular bonus rate at that time. If the bonus rate is greater than the ABR, your basic income will go up, if the bonus rate is less, your basic income will go down, if it's the same, your basic income will remain the same. We do guarantee that your income will never fall below a certain level.

After we've calculated your new basic income, we then apply an additional bonus rate (if we've decided to offer one) to come up with the full amount that you'll be paid over the year.

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