However, Term Certain Annuity Factors are used instead of Single Life Annuity
If the structure is efficient, then only a portion of the excess of the single life annuity
over the starting amount of the J&S annuity is needed to buy the required insurance amount.
This increased cost is reflected in a lower annuity payment than would be paid under a single life annuity
at either of the two ages, or under the joint life annuity structure.
Assuming a Section 7520 interest rate of 6.0%, the present value of the annuity is $27,621 (see Appendix K for valuation tables and examples of single life annuity
calculations), so the gift to charity is $22,379 ($50,000 - $27,621).
Milliman's pricing assumptions are likely to be different from those of the company in Clements' example, and Milliman is using a joint-and-survivor income benefit that is more costly than a single life annuity
So there are basically two types of private annuities: (1) the single life annuity
under which payments cease at the death of the annuitant; and (2) the joint and last survivor annuity, in which payments continue until the death of the last survivor, e.g., payments continue as long as either the husband or wife is alive.
You have the option to elect for a widow's pension not to be paid which will increase your single life annuity
. If you choose this option, your pension benefits will cease on death.
Thus, the joint and survivor benefit is a reduced single life annuity
that provides a benefit over two lifetimes instead of one.
However, now is not necessarily a good time for annuity rates, as a male aged 65 purchasing with pounds 10,000 a single life annuity
guaranteed for five years, would receive around pounds 893 per year income, as opposed to pounds 916 p.a.
The tax was paid by the estate on excess retirement accumulations, which were defined as the excess of the present value of the decedent's interest in all qualified retirement plans over the present value of a single life annuity
with annual payments equal to the annual excess retirement distribution limit.
The excess accumulation tax is paid by beneficiaries on inherited pension assets that exceed the value of a single life annuity
paying out $155,000 a year for someone with the life expectancy of the deceased.
The survivor joint annuity works in a slightly different manner than a single life annuity
. A retiring employee is promised a monthly retirement benefit lower than the single-life payment, This "premium" is usually about 10 percent of the higher payment.