Annuities: time frames

Ermanno Pitacco


In the context of financial planning, a simplified approach to the classification of post-retirement income solutions is frequently adopted. The following alternatives are usually considered:

    • the whole life annuity-immediate, purchased at the retirement time and financed by a single premium (frequently called the single-premium immediate annuity (SPIA));

    • the deferred life annuity, purchased during the working period, usually financed by a sequence of premiums, with benefit payments commencing at the retirement date;

    • the income drawdown, ie, a sequence of withdrawals from a fund, starting at the retirement time.

According to the whole life annuity-immediate, the contract time frame and the payment time frame coincide, extending over the retiree’s whole lifetime, ie, from retirement time onwards. The deferred life annuity implies a longer contract time frame, commencing at the time of policy issue and including the payment time frame. Finally, the income drawdown features a payment time frame that stops at the fund exhaustion or at the retiree’s death, whichever is the

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