A life annuity gives you regular benefit payments for the rest of your life – no matter how long you live. With a life annuity, you will have financial security when you retire and for the rest of your life, and your contributions are fully tax deductible.
You can set up a life annuity at any time – regardless of your age. You will receive a benefit payment each month and for as long as you live.
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Your beneficiaries are guaranteed your entire amount of savings in the period during which you are saving up and until the date your benefit payments start. This means that your beneficiaries will receive your entire amount of savings.
When you start receiving life annuity benefits, you can ensure that your beneficiaries are guaranteed your benefits for a certain number of years if you die before a specific date.
As the only tax-deductible pension scheme, there is no maximum amount you can contribute to your life annuity – either as a personal annuity or through your employer. You can choose to pay a lump sum or make regular contributions. We always recommend that you let your employer manage the contributions if possible, as this is the most flexible method of contribution – especially if you want to change or terminate the contribution agreement at a later date.
Contributions to a life annuity are deducible against top-bracket tax. If you cannot utilise the tax deduction yourself, your spouse may do so instead. Your benefits will be subject to income tax, but not to labour market contributions.
You can take out an insurance cover which means that you do not have to make contributions to your pension scheme yourself if your earning capacity is permanently or temporarily reduced to a certain level – due to illness or an accident. This means that your pension savings will continue to grow as if pension contributions were still being made.
The expenses on a life annuity depend on
Any person aged 18 or over can set up a life annuity. You can start receiving your benefits when you reach your pension payout age (previously early retirement age). Other, more favourable rules may apply to pension schemes set up before 1 May 2007.
An annuity pension scheme gives you the financial freedom to maintain your standard of living, even though your active working life has ended.
A retirement savings scheme is typically paid out as a lump sum, which you can spend whenever you want.
Time for retirement? The order in which you withdraw your pension savings may be very important. Get an overview of your payout options and make a pension plan that suits your needs.
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