With the advent of the REA, then, every retirement decision involves a secondary decision: will the retiree take the (higher) single life annuity
, or the joint and survivor annuity?
Defined contribution plans may offer several options for benefit distribution, but this article focuses on the form of benefit that was the subject of the 1983 Norris decision, the single life annuity
beginning at retirement.
In the case of a defined benefit plan, the maximum benefit is determined by calculating the accrued benefit of a single life annuity
at a rate equal to 2.
Therefore, unless your pension provider has placed particular restrictions on your policy and refuses to give effect to the increase in the maximum drawdown rate (and I see no reason why they ought to do so), you are able to increase the amount of drawdown income you receive, up to 120% of the comparable single life annuity
A PS40,000 pension pot pays PS2,434 yearly income with a single life annuity
, compared to PS2,226 with a joint life - PS200 difference.
41 a month for a person who retires at age 65 and receives a single life annuity
The value of a single life annuity
of $1 yearly, paid continuously, is
However, if you are unable to prove a secure income of PS20,000 per year, the maximum amount of income you may withdraw, prescribed by government, is 120% of the single life annuity
that somebody of the same sex and age could purchase (this used to be 100% but was raised to 120% by George Osborne in December 2012, acknowledging the downward pressure on incomes for those people in drawdown).
More than 60% of people buy a single life annuity
, where the income stops if the policyholder dies, leaving their partners and dependents without an income from that point on.
Not bad going when the provider, which did not sell impaired annuities, had offered a single life annuity
of pounds 3,600.
For those who purchase an annuity and make that one-off decision as to how to provide their income after retirement, 64 per cent buy a single life annuity
and therefore provide no long term provision for their spouse.
The excess accumulation is the value at the date of death in the decedent's retirement plans over the present value of a single life annuity
with annual payments over predetermined amounts.