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Guaranteed Benefits
The Prudential Guaranteed Income Plan offers a choice of a Guaranteed Income, Guaranteed Lump sum or a combination of both options.
Flexible term
The length of term can be anywhere between 5 and 15 years to best suit the needs of your client.
Death Benefit
All plans have an inclusive lump sum death benefit at no additional cost.
About the Prudential Guaranteed Income Plan
Designed primarily for those clients who are phasing into, or are in the early years of retirement, our Guaranteed Income Plan is aimed at Trustees of UK registered pension schemes, particularly Self-Invested Personal Pension (SIPP) schemes, to invest on behalf of their scheme members.
The Prudential Guaranteed Income Plan is an income-producing product that’s held inside a client’s drawdown portfolio, to help meet their retirement income planning needs. It also offers a guaranteed lump sum option, or a combination of income and lump sum guarantees.
Using part of their pension fund to purchase a fixed term income while the rest of the pot remains invested, can work for clients looking for a phased retirement – to top up their income levels – but also for clients looking to retire now who don’t want, or need, to commit their pension fund to a lifetime annuity.
It can complement other retirement solutions, as part of a structured approach, and balances the need for certainty of income or returns and financial freedom. And the combination of income and/or lump sum guarantees, as well as a cash-in option and a death benefit, provides reassurance and peace of mind.
The Guaranteed Income Plan is backed by an investment strategy within the Prudential Assurance Company Limited (PAC) With-Profits Fund focused on fixed income assets. This approach aims to provide stability to support the underlying income and lump sum guarantees and provides potential for the plan to pay a little bit more income and / or lump sum than the guaranteed amounts.
As a financial adviser, you can instruct Trustees to purchase a Guaranteed Income Plan on your client’s behalf.
The three options available:
Maximum income
- A guaranteed income will be paid for the duration of the Plan term.
- We’ll never pay less than this but some years we might be able to pay a little bit more.
- There won’t be any money left at the end, but this option provides the highest guaranteed income.
Maximum lump sum
- A guaranteed lump sum will be paid at the end of the Plan term.
- We’ll never pay less than this but we might be able to pay a little bit more.
- There won’t be any income paid, but this option provides the highest guaranteed lump sum.
Combination (Regular income with lump sum)
- We’ll guarantee to return the full amount of the investment at the end of the term and will provide a guaranteed income in addition to this.
- The guaranteed income will be less than under the maximum income option.
- We’ll never pay less than the guaranteed income but some years we might be able to pay a little bit more.
- We’ll never pay less than guaranteed lump sum (equivalent to the investment amount) but we might be able to pay a little bit more.
Contact your account manager for information about which Schemes will accept Prudential Guaranteed Income Plan as an investment
Trustee Registration
For Trustees to register a scheme with the Prudential Guaranteed Income Plan.
Key elements
Eligibility criteria
Trustee:
- Trustees of UK Registered Pension Schemes
Scheme member:
- Minimum Age 55 (unless they have a protected pension age)
- Maximum Age: None
Contributions
- Minimum investment: £10,000
- Maximum investment: £1 million*
*If your client would like to pay in more than this, please contact us to discuss.
Term
- Minimum Term: 5 years
- Maximum Term: 15 years
- Part years in whole years and months are also available to target specific dates (for example 8 years and 5 months).
Payment date
- Income is paid to the SIPP.
- Payment dates depend on the date funds are received and the payment frequency e.g. the member sets up income monthly in arrears – funds are received and the Plan is set up on 1 March, so the first income payment will be made on 31 March.
- There is no option to select a specific payment date.
Features
Our Guaranteed Income Plan offers your clients:
- Benefit options – a choice of a regular income, a lump sum at the end of the term, or both.
- Guaranteed income – calculated at the start of the Plan and guaranteed to be paid each year, over the term. We’ll never pay less but some years we might be able to pay a little bit more.
- Guaranteed lump sum – the certainty of a guaranteed amount at the end of the fixed term, We’ll never pay less but we might be able to pay a little bit more.
- Income choices – income can be taken monthly, quarterly, half-yearly or annually, in advance or in arrears.
- Length of term to suit individual circumstances – the fixed term can be anything from 5 to 15 years.
- Full withdrawal option – unlike a lifetime annuity, funds can be accessed if needed. The amount paid will be based on the value of the remaining benefits at that time.
- Death benefit – on death before the end of the fixed term, funds can be passed on. The amount paid, will be based on the value of the remaining benefits at the date of death.
- Adviser charging options – set-up and ongoing adviser charge options are available.
- Flexibility – a range of retirement options is available at the end of the fixed term including drawdown, a fixed or lifetime annuity, or a combination of these.
Risks
- Once the Plan has started, the benefits and income options selected cannot be changed.
- Where a guaranteed lump sum is selected, we guarantee the amount at the end of the term, but we can't guarantee what income this will provide in future.
- This is a single life plan so any income will stop on death and a lump sum death benefit returned to the SIPP Trustee.
- Although we may pay a little more than the guaranteed income some years, the income paid may not keep up with inflation.
- To provide the guaranteed elements (income and lump sum) the Plan is invested in a range of relatively cautious assets. Alternative products can give more freedom to invest in assets that could deliver a higher return.
- The cash-in and death benefit values will change over time as market conditions change and may be less than the investment amount, or the total amount payable over the term. They may also be less than needed at that time to replace the remaining guaranteed benefits payable.
Key Documents
Adviser documents
Client and Trustee documents
Charges & Costs
Our Guaranteed Income Plan can facilitate both set-up and ongoing Adviser Charges, on instruction from the Trustee. All charges are agreed between yourself and your client.
- Set-up advice charge – the maximum set-up advice charge is 5% of the investment, with an upper limit of £30,000. This charge is taken from the investment amount and paid to you, before calculating your clients benefits.
- Ongoing advice charge – this can only be facilitated if income is being taken. The maximum ongoing advice charge is 1% of the investment amount, less any set-up adviser charge, deducted from income and paid to you, before income is paid to the Trustees. The frequency of ongoing advice charge payments will be the same as the frequency of income payments.
The charges we take are factored into the calculation of the guaranteed benefits, which we confirm at the start of the Plan. These charges cover various costs associated with setting up and looking after the Plan, for example the cost of administration, investment management and providing the guarantees.
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