Annuity

An annuity comes in many forms, but a simple definition is that an annuity is a contract that converts a sum of money into a series of periodic payments for an agreed upon period of time. An annuity can be thought of as a financial vehicle that converts a pool of money into a stream of income. Annuities are most useful in addressing the financial planning needs of people in or approaching retirement. Annuities are unique in the financial world because they can provide protection against the risk or outliving one’s assets (longevity risk) by guaranteeing income payments in perpetuity or any other selected amount of time. Annuities can be viewed as a type of personal pension plan. Social Security is similar to an annuity in that money contributed over the course of one’s working years is converted into a series of periodic payments that provide income during retirement.

Swiss Re First in Providing Longevity Insurance to a Public Pension Fund

The Reinsurer Swiss Re has provided the first public-private longevity transaction with a U.K.-based public sector pension fund . Swiss Re is essentially providing longevity insurance to 11,000 of the current pensioners under the Royal County of Berkshire Pension Fund. Swiss Re will assume the "floating" annuity payments and longevity risk for the 11,000 pensioners in exchange for an ongoing fixed premium. The Royal County of Berkshire retains control over the plan assets and the plan...

Glossary:

Advanced Life Deferred Annuity

Key Phrases:

Longevity Insurance

Swiss Re

Read more about Swiss Re First in Providing Longevity Insurance to a Public Pension Fund
Log in to post comments

Key Phrases:

Glossary:

Advanced Life Deferred Annuity

Key Phrases:

Longevity Insurance

Swiss Re

Annuities in 401k Plans Under Consideration by Obama Administration

Members of Congress and officials from the Departments of Treasury and Labor are working on options that would provide sources of guaranteed lifetime income to participants in 401k and other pension plans. At a high level, it is clear that the Obama Administration wants to create structures and incentives for: Increasing retirement savings. Providing people with the ability to turn those accumulated savings into streams of income that last through retirement. A trial program that would involve...

Glossary:

Annuity

Annuitization

Compulsory Annuitization

Key Phrases:

Read more about Annuities in 401k Plans Under Consideration by Obama Administration
Log in to post comments

Key Phrases:

Glossary:

Annuity

Annuitization

Compulsory Annuitization

Key Phrases:

SEC Postpones Effective Date of Rule 151A

The Securities and Exchange Commission (SEC) has agreed to a two year "stay" on SEC Rule 151A. SEC Rule 151A is a contentious rule that, from a regulation standpoint, would treat fixed indexed annuities as securities rather than insurance products. The securities regulation would be under FINRA oversight. The stay basically postpones the rule's proposed January 12, 2011 effective date for a period of two years. Source: Wall Street Journal Full Story

Glossary:

Key Phrases:

Read more about SEC Postpones Effective Date of Rule 151A
Log in to post comments

Key Phrases:

Glossary:

Key Phrases:

Senate Introduces Lifetime Income Disclosure Act

The Senate introduced a piece of legislation that would require retirement plan sponsors to provide plan participants with estimates of how much income their accounts will generate in retirement. The majority of Americans approach retirement without a basic financial plan and with resources that are not sufficient for support of pre-retirement spending and lifestyles. The Lifetime Income Disclosure Act would provide Americans with a clear picture of the income-producing potential of their...

Glossary:

Key Phrases:

Lifetime Income Disclosure Act

Retirement Plan

Read more about Senate Introduces Lifetime Income Disclosure Act
Log in to post comments

Key Phrases:

Glossary:

Key Phrases:

Lifetime Income Disclosure Act

Retirement Plan

Variable Annuity Assets Recovering from Financial Crisis Lows

Variable annuity net asset values have recovered to pre-financial crisis levels. Buoyant capital markets over the past several months have resulted in the first increase in variable annuity net asset values in fifteen months. Gross variable annuity sales in the third quarter of 2009 were $31 billion. Qualified sales were $20.8 billion while non-qualified sales were $10.2 billion. Net sales of variable annuities in the third quarter were only $2.8 billion, which begs the question of why there...

Glossary:

Key Phrases: