PENSION ANNUITY Meaning and
Definition
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A pension annuity refers to a financial product that provides a regular income stream during an individual's retirement years. It is a contract between the annuity holder, typically an individual, and an insurance company or a financial institution. In exchange for a lump sum payment or regular contributions made during the accumulation phase, the annuity holder will receive a predetermined income payout during the annuitization phase.
The purpose of a pension annuity is to ensure a stable source of income for individuals once they have reached retirement age, as it serves as a supplement or substitute for a traditional pension plan. Annuities can be purchased either with pre-tax or post-tax money, depending on the type of annuity chosen.
Pension annuities come in different forms, including fixed annuities and variable annuities. With a fixed annuity, the income payments are predetermined and remain constant over the annuity period. In contrast, variable annuities offer the potential for higher returns but also involve investment risks, as the income payments fluctuate based on the performance of the underlying investment options.
Additionally, pension annuities can be lifetime annuities or for a fixed period. Lifetime annuities guarantee income for the remainder of the annuitant's life. On the other hand, fixed-period annuities provide income payments for a predetermined number of years, after which the annuity contract ends.
Overall, a pension annuity is a financial instrument that enables individuals to secure a steady stream of income in retirement, offering financial stability and peace of mind during the later stages of life.
Common Misspellings for PENSION ANNUITY
- oension annuity
- lension annuity
- 0ension annuity
- pwnsion annuity
- psnsion annuity
- pdnsion annuity
- prnsion annuity
- p4nsion annuity
- p3nsion annuity
- pebsion annuity
- pemsion annuity
- pejsion annuity
- pehsion annuity
- penaion annuity
- penzion annuity
- penxion annuity
- pendion annuity
- peneion annuity
- penwion annuity
- pensuon annuity
Etymology of PENSION ANNUITY
The word "pension" finds its origins in the Latin word "pensio", which means "payment" or "rent". This term was originally used to refer to a regular payment made to a soldier or public official.
The word "annuity" comes from the Latin term "annus", meaning "year". It originally referred to an annual payment or sum of money that was given for a specific period.
When these two words are combined, "pension annuity" refers to a regular payment or income that is provided annually, typically as part of a retirement plan or an insurance policy.
