ANNUITY OPTIONS
Annuity Options
ANNUITIES
In terms of the Act, an annuity is a contract or policy sold by an insurance company, designed to provide monthly payments to you when you retire on a monthly basis after retirement. When you retire, you have two options, either to buy an annuity from insurance or from the Fund. In terms of the Act (as amended), it is compulsory to buy an annuity. You cannot encash all your Fund Credit, rather, you will be entitled to a portion of your Fund credit. When you retire (early or normal) from the Fund, your portion of the Fund Credit less all deductions (including the payment of taxes and any gratuity ) will be transferred into the pensions account. You will, after receiving counseling from the Fund, make the following elections: Percentage to be received as a gratuity, that is, cash lump sum payment. The maximum is 50%. The type of monthly pension is determined by the option taken by a pensioner; options are listed below:
1. Single Life Annuity
with five(5) year guaranteed payment period
This option makes provision for pension to be paid to a member for the rest of his/her life.
If he/she dies within the guaranteed payment period of 5 years, the surviving spouse/beneficiary will receive a lump sum benefit equal to the reminder of the guaranteed payment period as a one-of payment.
However, a reduced pension is paid compared to the option with no guaranteed payment period due to the additional codt of the guarantee.
2. joint life annuity,
50% spouse's reversion,
no guaranteed payment period
This pension is calculated on the basis of two individuals, the retiree and their spouse. The retired member will receive a pension for the rest of his/her life. Upon death of a member , the surviving spouse receives 50% portion of the pension for the rest of his/her life
A reduced pension is paid compared to the single life option due to additional cost of benefits payable to the surviving spouse.
3. joint life annuity ,
50% spouse's reversion
5 year guaranteed payment period
In this option, pension is paid for the lifetime of the retired member. If he/she dies within the guaranteed payment period of 5 years, full pension is paid to the surviving spouse until the end of the guaranteed payment period (5 years). There after the surviving spouse receives 50% portion as monthly pension for their lifetime.
A reduced pension is paid due to the cost of providing the guaranteed payment period and the benefit payable to the surviving spouse.
4. outsource annuity from the locally registered annuity provider
Option to purchase annuity policy from local registered insurance company.
Section 27 of the Act established the fund read with the definition of the tern “annuity” provides for purchasing of annuity policies from the registered insurance company of the member’s choice.
5. single life annuity with ten (10) year guaranteed payment period
This option makes provision for a pension to be paid to a member for the rest of his/her.
if he/she dies within the guaranteed payment period of 10 years, the surviving spouse/beneficiary will receive a lump sum benefit equal to the reminder of the guaranteed payment period as a one-off payment.
However, a reduced pension is paid compared to the option with no guaranteed payment period due to the additional cost of the guarantee.
6. single life annuity with fifteen (15) year guaranteed payment period
This option makes provision for a pension to be paid to a member for the rest of his/her life.
If he/she dies within the guaranteed payment period of 15 years, the surviving spouse/beneficiary will receive a lump sun benefit equal to the reminder of the guaranteed payment period as a one-off payment.
However, a reduced pension is paid pension compared to the option with no guaranteed payment period due to the additional cost of the guarantee.
7. joint life annuity , 75% spouse reversion no guaranteed payment period
This pension is calculated on the basis of two individuals, the retiree and their spouse. The retired member will receive a pension for the rest of his/her life. Upon death of a member , the surviving spouse receives 75% portion of the pension for the rest of his/her life.
A reduced pension is paid compared to the single life option due to additional cost of the benefit payable to the surviving spouse.
8. joint life annuity, 100% spouse's reversion, no guaranteed payment period
This pension is calculated on the basis of two individuals, the retiree and their spouse. The retired member will receive a pension for the rest his/her life. Upon death of a member , the surviving spouse receives 100% portion of the pension for the rest of his/her life.
A reduced pension is paid compared to the single life option due to additional cost of the benefit payable to the surviving spouse.
9. joint life annuity, 10 years guaranteed payment period
In this option, pension is paid for the lifetime of the retired member . If he/she dies within the guaranteed payment period of 10 years, full pension is paid to the surviving spouse until the end of guaranteed payment period (10 years). Thereafter the surviving spouse receives 50%/75%/100% portion as monthly pension for their lifetime depending on the chosen spouse reversion.
A reduced pension is paid due to the cost of providing the guaranteed payment period and the benefit payable to the surviving spouse.
Pension Fund House
10. joint life annuity, 15 years guaranteed payment period
In this option, pension is paid for the lifetime of the retired member . If he/she dies within the guaranteed payment period of 15 years, full pension is paid to the surviving spouse until the end of guaranteed payment period (15 years). Thereafter the surviving spouse receives 50%/75%/100% portion as monthly pension for their lifetime depending on the chosen spouse reversion.
A reduced pension is paid due to the cost of providing the guaranteed payment period and the benefit payable to the surviving spouse.