Income paid in advance or in arrears

Payments can be made either in advance or arrears. If you opt for monthly income and purchase your annuity on 1st July and you receive your payment on that day, you are being paid in advance. If your first payment is not made until 1st August, you are being paid in arrears.

Generally people opt for monthly in arrears because the slight increase in lifetime income is favoured over the slight increase in speed of payment, which in practice is less than one month, as the annuity provider must take receipt of your pension fund monies before they can make payment.

Indicative cost Comparison

Figures based on male aged 65, single life, no escalation and no guarantee period. Source: The Annuity Bureau –July 2010