When you open a Lifetime Pension, we combine your money with other Lifetime Pensions into what's known as the pool. We invest the pool in our Balanced option for Retirement Income accounts.
The pool’s yearly financial result is based on a number of factors including:
- The investment performance of our Balanced option for Retirement Income accounts
- Fees and costs
- Mortality experience – insurance costs are taken from the pool, and the pool keeps credits when members die and their 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 go up. If the pool’s financial result is lower than 5%, your payments will go down.
We’ve designed it to help keep up with the rising cost of living. By adjusting income against the pool's balance and the number of members in the product, it means there’s always money to make payments. By doing this, the Lifetime Pension can pay you an income for life.
We'll let you know the annual adjustment on our website and in your annual statement.