Adding an annuity purchase on the Cash Flow Modeller
CashCalc's Charges & Fees section can also be used to illustrate the purchase of an annuity.
This can be used in much the same way as a charge or fee, in that the money is withdrawn from the pension in question and is simply removed from the client's total savings.
To make things even easier, we have added a helpful shortcut in the Charges & Fees section entitled "Quick-add: Annuity Purchase".
How do I use it?
To add an annuity purchase, navigate to the Charges & Fees tab on the left hand side and click on the button entitled "Quick-add: Annuity Purchase".
Then, enter the age at which the annuity will be purchased, the pension which will be used to purchase the annuity, and the amount of the pot to be used.
The system will tell you what the forecasted value of the pot will be at that age, so you can ensure to use the correct proportion of the pot. You can purchase the annuity using either a flat amount, or a percentage of what the pot will be in that year.
Once you have done this, you will need to enter what the corresponding annuity income will be. This will start at the same time as the annuity is purchased.
To do this, enter the expected amount that the client will get, or alternatively you can choose that the income will be a percentage of the purchase amount (e.g. 4%).
Finally, choose whether the annuity income is to be level or indexed, then simply click "Add".
This shortcut will ultimately create a charge to show the purchase of the annuity, and also add an income to illustrate the annuity income.
If you need any further help with this or have any additional questions about how this works, please feel free to contact us at [email protected].