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Open market annuity option

Liverpool Victoria Friendly Society has redesigned its with-profits pension annuity to allow annuity transfers under the open market option.

The Omo means annuitants can shop around for an annuity rather than staying with their existing pension provider. The previous version of Liverpool Victoria&#39s with-profits pension annuity was only able to accept transfers from personal pensions. Now it can take transfers from other types of pension including occupational schemes and free-standing AVCs.

Pension funds transferred into the annuity are invested in Liverpool Victoria with-profits fund. Annuitants can take income payments monthly, quarterly, half-yearly or annually. They choose an anticipated bonus rate and this level of income is guaranteed for the first two years. There is also a guaranteed minimum income.

Annuitants who base their income on the assumption that there will be no bonus rate get a lower level of income for the first two years, subsequently increased to reflect the actual bonus rate. For those who choose the highest anticipated bonus rate, income may reduce after the first two years if actual bonus rates are lower.

This with-profits annuity provides an extra safety net in the form of the guaranteed minimum income. This makes it suitable for more cautious annuitants, especially as some with-profits providers have been cutting their bonus rates after a poor investment year.

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