Annuity Plan: Benefits

The Annuity Plan is set up to secure the desired income stream for an employee and/or the dependants. The income stream could start immediately or after a number of years – at retirement, for example.

Below are examples of some of the immediate Annuity options:

Annuity payable for life

The annuity is payable until the employee dies. No payments are made after death irrespective of whether the employee lives for only one month after selecting the annuity or until the age of 100!

Annuity payable for life, but guaranteed for 10 years
(for example)

The annuity is payable for 10 years irrespective of whether the employee dies or not. If alive after the 10 years, the annuity continues until death.

Annuity payable for life but for a maximum period of 5 years (for example)

No payments are made after the 5 year period has elapsed or after the death of the employee, if sooner.

Guaranteed Annuity payable for 10 years (for example)

The annuity is payable for 10 years irrespective of whether the employee is dead or alive. The annuity will not be payable after the expiry of the 10 year period even if the employee is still alive.

Last Survivor Annuity reducing to 50% (for example) on first death

The annuity is payable at the full rate whilst the employee and specified dependant are both alive. On the death of the first life, the annuity is reduced by 50%. The reduced annuity continues to be paid until the death of the second life.

Last Survivor Annuity guaranteed for 10 years (for example)

The annuity is payable for 10 years irrespective of whether the employee and/or the specified dependant are alive on the annuity payment dates. If either or both remain alive after 10 years the annuity continues to be paid until the death of the second life.

Annuity payable for life and on death a 50% annuity to the spouse (for example)

The full annuity is payable until the employee dies. If the spouse survives the employee, the annuity continues at half this rate. This is payable until the death of the spouse.

Examples of deferred annuity are similar to the options above. However, before a deferred period expires, the ‘options on death’ must have been dealt with.

Typically:

• The premium is refunded on death prior to the annuity starting.
• The premium is not refunded on death prior to the annuity starting.
• The Plan pays a death benefit – a lump sum or pension to the specified dependant/children.