At the end of the specified period you will receive your ‘Guaranteed Maturity Amount’. You can choose to invest in another retirement income product with the maturity amount, or take the money out of your pension.
As you are not tied in for life – in contrast to a lifetime annuity - you retain a certain amount of freedom, but still benefit from the security or knowing how much income you will receive and your ‘guaranteed maturity amount’ at the end of the specified period.
It does however come with risks which you will need to explore before making your choice. If you would like to secure a guaranteed income for life then you may be interested in a lifetime annuity instead.
The value of the maturity amount is calculated at the start of the plan and is based on the amount of income taken and options selected. Fundamentally the higher the income the lower the maturity amount. This remains part of the pension plan and this means that another retirement option must be selected at the end of the fixed term.
For more information on fixed term income plans, speak to a retirement options specialist.