What is an annuity?

When you retire, some or all of your pension fund can be used to purchase a lifetime retirement pension which is also called an annuity. The purpose of this annuity is to provide an income for the rest of your life. An annuity is the only investment that ensures an income for life, no matter how long you live. An annuity suits those who have a low appetite for risk and demand certainty of income in retirement.

The Irish Life Corporate Business Pensionchoice range offers two main annuities:

1. Fixed Pension Annuity

The Fixed Pension buys a regular retirement income that is set out at the beginning. The income amount can be set at a fixed level amount, or increased at a fixed rate each year, usually 3% or 5%. Purchasing a pension that increases every year will be more expensive than a fixed pension at the outset. In other words, the pension fund would give you a lower initial level of income.

• Advantage: You know exactly what income you are going to receive in € terms for the rest of your life.
• Disadvantage: The fixed income option gives you no protection against the effect of higher than expected inflation.

2. Inflation Protected Pension Annuity

The Inflation Protected Pension buys a regular income that will increase with inflation every year during your retirement. You have the option to purchase a pension that increases in line with actual inflation (the Consumer Price Index) each year or one that increases to a maximum amount with inflation eg. 3% each year.

• Advantage: You know exactly what income you are going to receive in real terms for the rest of your life. The purchasing power of your pension is protected against the effects of inflation. Your pension is guaranteed not to decrease (even if there is deflation).
• Disadvantage: The initial income level is lower than that under the Fixed Pension with no increases.

Income Level

The amount of initial income available for a given pension fund can seem sometimes quite low - this is due to the fact that the cost of fixing payments over such a long period is potentially high as many people are now living longer and can look forward to 20 or more years in retirement.

Additional Options

The following options can be added to any of the above mentioned annuities, at an extra cost:

A. Dependants' Pension

You can choose for an income amount to continue to be paid to your spouse/partner or other dependants following your death.

B. Minimum Payment Period

Irish Life Corporate Business can ensure to pay your income after you retire for a minimum period of up to ten years. Therefore, should you die during this fixed period, the balance will be paid to your dependants. This is sometimes called a guaranteed period.

C. Investment Protection

When you die, we can pay a lump sum to your dependants which is equal to the original pension fund, less any income we have already paid from the fund since you retired. Under tax law, the availability of this option varies by individual circumstances and is sometimes unavailable. Consult your Financial Advisor or Irish Life Corporate Business for more information.

How do you get a quote?

The Irish Life Corporate Business Pensionchoice range has an online annuity quote calculator which allows you to automatically receive quotes. Alternatively, talk to your Financial Advisor or call Irish Life Corporate Business Sales Support on 01 704 1845, email: sales.support@irishlife.ie.

Our strengths in annuities

• Only the State pays more pensions than Irish Life Corporate Business – in 2008 we paid out over €135 million to over 25,000 pensioners.
• We offer the widest range of pension annuity options in Ireland.
• Our annuity administration service is highly regarded by customers and pension professionals.
• We offer a unique  online annuity quote calculator which is dedicated to providing you with quotes at your convenience.