LV total regular bonuses

shilts

My wife has a with profits pension with Liverpool Victoria which she still pays into . Her statement says that on retirement she would get a guaranteed annuity plus the total regular bonuses added to date . Our question is where the amount of guaranteed annuity is clear are the figures for the total regular bonuses the amount that is paid annually ? So we can add the guaranteed annuity to the total regular bonuses to get the pension payable annually , thanks .

sandsy

The regular bonuses add to the value of the pension pot before retirement. They are effectively the (smoothed) returns earned by the pension pot while it is invested in the with profits fund. With profits funds smooth out the ups and downs of the investment market. There may als be a terminal bonus when the pension accumulation stage finishes.

Once you decide to take income from the pot, then the guaranteed annuity is an option. The amount will depend on the final pot size, including any regular and terminal bonuses. It’s often expressed as a % of the final pot.

Terron

I have a couple of pensions with GARs of over 10%.with Aviva (formerly Norwuch Union). They stopped paying annual bonuses about 20 years ago. They were not guaranteed, I think they have started paying terminal bonuses again.

shilts

Thankyou . Where as the figure given for the guaranteed annuity is what she will receive per year I am not sure whether the figure given on the annual statement for the total regular bonuses which will be paid in addition to the guaranteed annuity is what she would receive per year or is it a one off payment , thanks .

sandsy

The guaranteed annuity amount paid is dependent on the size of the pension pot at retirement, Eg 10% of final pot.

The pot at retirement is made up of the contributions made and investment returns made on those contributions. For a with profits fund, the investment returns are added to the pot by way of bonuses, some on an annual basis and some by way of terminal bonus.

Some bonuses have already been allocated to value of the pot. More will be added in the period to retirement. So the total guaranteed income at retirement is based on the total pot, including all bonuses.

Bonuses are not separate. They form part of the final value of the pension pot and the value of them will be taken into account when determining the level of guaranteed income. Higher bonuses from now to retirement = more guaranteed income.

shilts

Thanks Sandsy . Looking at the most recent statement it says 'your policy provides you with a guaranteed yearly income ( the guaranteed annuity PLUS the total regular bonuses added to date ) . Going back for at least 15 years through the statements the guaranteed annuity amount has never changed . Also total regular bonuses have not been added to the policy for many years which I assumed was because the guaranteed annuity far exceeded the value of the policy . My wife pays a fixed amount monthly which has never changed . When we enquiried about increasing contributions we were told that this was not possible . It would seem that as long as my wife continues to pay the fixed contributions up until the selected retirement date the guaranteed annuity is a fixed amount unless of course the policy value grew to a point that enabled a higher guaranteed annuity, which I think is probably unlikely .