When you purchase a Lifetime Pension, your money is combined with other Lifetime Pensions into what's known as the pool. We invest the pool in our Balanced option for Retirement Income accounts.
Each year, the pool achieves a financial result, which is based on a number of factors including:
- The investment performance of our Balanced option for Retirement Income accounts
- Fees and costs
- Mortality experience – the pool is debited for insurance costs, and retains credits when members die and their income payments stop
- The timing of Lifetime Pension purchases and payments made from the pool.
The annual adjustment to your Lifetime Pension is based on a 5% benchmark, so each year if the financial result of the pool is above 5%, then your payments will increase. If the pool’s financial result is lower than 5%, your payments would decrease.
The annual adjustment is designed to help keep up with the rising cost of living, and it means the product always has money to make payments, by adjusting income against the pool's balance and the number of members in the product. By doing this, the product can pay income for life.
We'll let you know the increase or decrease on our website and in your annual statement.