At one level it works like a traditional annuity, paying an income for life in retirement. But instead of committing all of your funds to buying the annuity when you retire, you can leave money invested to continue growing. You can choose the level of income you receive annually from between upper and lower limits, which the Pru resets every three years after reviewing the progress of your investments. Your money can be invested in the stock market via 14 different funds from a selection of investment managers, including Schroders, Perpetual and Merrill Lynch. There are three investment strategies to choose from - cautious, standard and adventurous.
Policyholders can make six free fund switches a year.
The idea is that investment returns feed into the fund while you draw income. Prudential says the bonus enables it to guarantee income. Income levels are guaranteed never to fall below half the original starting amount. You can switch all of the money to an ordinary fixed annuity at any time, but do not have to do so until you are 90. This is a complex product and must be purchased through an independent financial adviser.