Securing an income for the rest of your lifetime

If you are looking for a secure income that will not fall in value or eventually run out, an option to consider is a Purchased Life Annuity (PLA). A PLA pays you income in the same way as a pension annuity. However, it is bought using your own money rather than with money in a pension. The insurance company you choose to buy the PLA from will pay you a secure income for the rest of your lifetime in exchange for your capital.


Your income payments are split into ‘return of capital’ and ‘interest’ and only the interest section is subject to tax. The interest section is usually the smallest part of your income, meaning that you get the majority tax-free. The older you are when you purchase the PLA, the smaller the income section.

The amount you receive is based on your age, life expectancy and the options you choose, such as joint life, increasing income and payment frequency. Usually the same sum of money will buy a larger income the older you are. It is also possible to get enhanced PLAs if you smoke or suffer any medical conditions.