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Income Choice Annuity

Your Income Choice Annuity gives you a regular income for life. 

How your annuity works

Your Income Choice Annuity is linked to the performance of the Prudential With-Profits Fund, so the amount you receive each year isn’t guaranteed - it could go down as well as up.

Your income will be based on a Required Smoothed Return (RSR) and may change over time, but we guarantee we'll never pay you less than a certain amount. We call this amount the 'secure level'.

Managing your annuity

  • You can't cash-in your annuity.

On any plan anniversary, you may have the option to:

  • change your annuity income within a set range we provide, or
  • switch to our Guaranteed Pension Annuity (GPA). 

Before you make any changes:

  • Please make sure you understand your options and how they might affect your plan.
  • Check your annual statement. It will confirm if changing your income is available, show the range, and explain how to make the change. It will also show you the income you might get if you decide to switch to our Guaranteed Pension Annuity.
  • We recommend you get financial advice. See 'Making financial decisions' for more information.

Manage your plan online

The quickest and easiest way to access information about your Prudential product, manage it, or to make changes to certain personal information, is through our Online Service. Registering is quick and easy.

Register for our Online Service

Already registered? Access your product details, update your information and message us directly using our Online Service.

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About your annuity income

Your annuity income can change over time. It may be affected by:

  • The Smoothed Return we announce each year
  • Changes to your tax code
  • Changes to your gross payment amount (before tax or other deductions).


We guarantee that your income will never fall below a minimum amount. This is known as the 'secure level'.

How the Required Smoothed Return affects your income 

Your income is based on a Required Smoothed Return (RSR). The RSR is the level of Smoothed Return (SR) we need to declare each year to maintain your current income.

The Smoothed Return represents your share of the overall profits from our With-Profits Fund, and is announced annually.

The level of the Smoothed Return depends mainly on:

  • The performance of the With-Profits Fund, and
  • the effective date of your annuity.


As investment returns can rise and fall, we can't guarantee what the Smoothed Return will be. It may be positive or negative.

What this means for your income

  • If the Smoothed Return is lower than your Required Smoothed Return, your income will decrease.
  • If the Smoothed Return is higher than your Required Smoothed Return, your income will increase.
  • We'll never pay you less than a certain amount. We call this amount the 'secure level.'

Things to consider

  • If you decide to switch, you can't switch back to our Income Choice Annuity (ICA).
  • The income you get might be higher or lower than your ICA income.
  • If you choose a level GPA, the income will stay the same for the rest of your life.
  • You can choose an income linked to RPI or fixed increase each year if you prefer, but your starting income might be lower than that from the level GPA.
  • Any changes to your income may affect your tax, personal allowance, or entitlement to state benefits.
  • Creditors may claim your income if you owe them money.

It's important to understand the importance and impact of the Required Smoothed Return (RSR) on your income.

The RSR is the Smoothed Return percentage we need to declare each year to maintain this level of income.

 

  • The higher the income you choose, the higher the RSR will be.
  • The higher the RSR, the greater the chance of your income reducing over time.
  • The lower the income you choose, the lower the RSR will be.
  • The lower the RSR the greater chance of your income increasing over time.
  • If your current income is based on an RSR higher than the range available, this is because we've changed the RSR range and income available. You don't have to change your income but if you do, then it must be within the current range.
  • Any future income changes must be within the range we provide you with each year. This income range will change each year.
  • Your Secure level will remain unchanged.
  • Any changes to your income may affect your tax, personal allowance, or entitlement to state benefits.
  • Creditors may claim your income if you owe them money.

What happens if your income changes?

  • We’ll contact you about seven weeks before your plan anniversary to explain your new income and your options.
  • If the regular payment amount changes by more than £10.00, we'll send you confirmation of the net amount shortly before it's due. This will include details of any tax that has been deducted.
  • If you would like to be notified whenever your payment changes by £1.00 or more, please contact us to opt in to confirmation letters.
  • If you weren’t expecting a change to your annuity income, please contact us.
  • If you weren’t expecting a change to your tax code, please contact HM Revenue & Customs (HMRC)

Further information

  • Smoothed Return Bonus Declaration 

    We’ve declared this year’s Smoothed Return bonuses for the Income Choice Annuity. These bonuses directly affect your income. You’ll see the impact reflected in your annual statement.

Learn more:

Bonus Declaration Flyer – Details the bonuses declared this year.

Smoothed Return Announcement

Next steps

If you have any questions or need any help with your annuity, call us on 0345 640 0000 or +44 118 964 502 if you're calling from abroad. Lines are open Monday to Friday, 08:30 - 18:00, excluding public holidays.

We might record your call for training and quality purposes. To find out more about how we use your personal data please visit my data