Retirement Planning
What is the difference between an annuity and an allocated pension?
The main difference between an annuity and an allocated pension is that income payments from an allocated pension are paid by a superannuation fund while annuities are paid by a life insurance company.
Pensions and annuities can be grouped into four categories:
|
Term Certain Pension and Annuities |
Lifetime Pensions and Annuities |
Term Allocated Pensions |
Allocated Pensions and Annuities |
Terms |
Fixed term |
Lifetime |
Life expectancy and variables set by government |
- |
Flexibility |
No flexibility after commencement |
- |
Income variable with no choice. |
Yes |
Income |
- |
- |
Percentage of account balance |
Flexible between minimum and maximum amounts set by government. |
Access to Capital |
No |
No |
No |
Yes |
Social Security |
Complying |
Can be complying for social security |
Complying |
- |