Annuity Income

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Annuity Income

The income one derives from an annuity one previously purchased. Many pensions and other retirement plans are annuities. However, one may receive annuity income from other sources, such as a settlement from a lawsuit or from lottery winnings. Annuity income is generally taxed like ordinary income.
References in periodicals archive ?
The Government said it had always been clear that for the majority of people, keeping their annuity incomes would be their best option.
Due to be launched in April 2017, the planned changes would have freed up people to sell their annuity income if they wanted to, without tax restrictions that currently apply, as long as their annuity provider agreed.
It said it was not willing to allow a market to develop which could produce poor outcomes for consumers, such as receiving poor value for their annuity income and suffering higher costs.
The government has always been clear that for the majority of people keeping their annuity incomes will be their best option, estimating that only 5% of people who currently hold an annuity would take advantage of this reform.
Consumer protection is a top priority for the government and we are not willing to allow a market to develop which could produce poor outcomes for consumers, such as receiving poor value for their annuity income stream and suffering higher costs.
The Economic Secretary to the Treasury, Simon Kirby, said: Allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected.
QE makes it cheaper for companies to borrow by pushing down the yield on government bonds, but annuity incomes are also based on these yields, meaning that new pensioners see their incomes reduced.
The government believe that keeping their annuity incomes will be the best option for the majority of people, however, people should have the right to make the decision that is best for them.
From April 2017, around five million people with annuity incomes will be able to sell them for a taxable cash lump sum.
The issue of falling annuity incomes therefore predates the financial crisis and cannot be attributed solely to the Bank of England's policy of quantitative easing.
According to statistics compiled by the annuity provider MGM Advantage, annuity incomes have fallen by approximately 15 per cent since Quantitative Easing began in March 2009.