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Annuity factor |
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Annuity factorPresent value of $1 paid for each of t periods.Annuity factor Similar MatchesAnnuityAnnuityThe payment of a regular income by a life company to an annuitant in exchange for a lump sum either for life or shorter periods.Annuities are typically used for pensions and the individual receiving the annuity is known as an annuitant. In the UK they can broadly be classified into two types:A Compulsory purchase annuity which is bought from the proceeds of a pension fund and is taxable as earned incomeA purchased life annuity which is bought with an individual's own capital and is taxed at a lower rate than a compulsory purchase annuity.There are three different types of pension annuities, commonly referred to as standard annuities, with-profits annuities and unit-linked annuities.Standard pension annuities are the most commonly purchased and account for over ninety percent of the UK market. The income from a standard pension annuity is guaranteed for the rest of the annuitant's life whereas the income from a with-profits or unit-linked annuity will fluctuate depending on the investment performance of the underlying assets. There are various options which can be provided including:Annuity certain: Income is paid for a given period whether or not death of the individual occursDeferred annuity: Income which does not commence until some future specified dateEscalating annuity: Income which increases annually by a given amount, for example 3%. The choosing of this option results in lower income compared with a level annuity over the initial yearsImmediate annuity: An annuity which starts to pay income soon after it has come into operation, for example at the end of the month following the payment of the lump sumJoint life annuity: Income usually relevant to two people (for example man and wife) which continues until the death of the first person onlyJoint life and survivor annuity: Income usually relevant to two people (for example man and wife) which continues until the death of the second personLevel annuity: Income which is paid at a fixed rate throughout the life of the individual. See also guaranteed minimum periodTemporary annuity: Income is paid either for a fixed period or until earlier death. Equivalent annual annuityEquivalent annual annuityThe amount per year for some number of years that has a present value equal to a given amount. Retirement annuity contract (RAC)Retirement annuity contract (RAC)Prior to 30th June1988, people not in pensionable employment (employment where no pension scheme exists) or people who were self employed were able to qualify for tax relief for contributions made to a pension scheme known as a retirement annuity under sections 226 of the Income and Corporation Taxes Act 1970. Although RACs were replaced by personal pension plans from 1st July 1988 those already in force may continue to operate. Variable annuityVariable annuitySee: 'annuity'. Compulsory purchase annuityCompulsory purchase annuitySee 'annuity'. Further SuggestionsImmediate payment annuityJoint and survivor annuity purchased life annuity Combination annuity Qualifying annuity annuity certain Annuity due Period certain annuity Deferred nominal life Annuity annuity deferral qualifying annuity Annuity in arrears Normal annuity form joint life annuity Life annuity Reverse annuity mortgages (RAM) reverse annuity mortgage fixed annuity Tax sheltered annuity temporary annuity increasing life annuity joint life and survivor annuity Annuity starting date Single life annuity Single Premium Deferred Annuity (SPDA) |
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