In the United States, pensioners could significantly increase their income by reducing death benefits and embracing annuitization
Purcal, 2009, Forced Savings and Annuitization
With CrossSubsidies: A Mutation of the Beast, Working Paper, University of New South Wales.
In the distribution phase, there are four methods: Annuitization
, Withdrawal Method, Withdrawal Method with a lifetime Income Protector, and the Time Segmented Method.
With this benefit, VA owners can withdraw specific amounts of money from the contract each year without affecting the guarantee of lifetime income payments through an annuitization
that provides a fixed amount of income after a waiting period--even if their account balance dropped to zero.
Major issues addressed are increasing pension coverage, increasing annuitization
in defined contribution plans, and adjusting pension policy to match increases in life expectancy.
Three safe-harbor methods are available for calculating the annual withdrawal amount: (1) the required minimum distribution method, (2) the fixed amortization method, and (3)the fixed annuitization
Moreover, annuity product innovation now allows for a guaranteed lifetime income stream without transferring the contract value to an insurer, as is done with traditional annuitization
In contrast, private pension plans often allow or require annuitization
of pension benefits.
Our patented approach to restructuring the funding of these assets creates very strong financial statement improvements compared to traditional annuitization
," said Karin Landry, managing partner at Spring.
A lower total score favors annuitization
or pension while a high score favors non-annuitization
or taking the lump sum.
Establishing mandatory or voluntary individual investment accounts, and options for annuitization
4) Guaranteed Minimum Income Benefits (GMIBs)--guarantee that the owner never receives less than a certain amount of income upon annuitization
at a stated point in the future.