By Karen Wentzel, 30 October 2019
For this reason, annuities are no stranger to the love-hate relationship in the financial world. Incorrect product advice and a misunderstanding about the features of annuities may lead to mixed emotions and different opinions, says Karen Wentzel, Head of Annuities at Sanlam Employee Benefits.
Annuities are split into two categories: guaranteed life and living annuities.
For all life annuities, pensioners carry no longevity or investment risk, as initial pensions and increases are guaranteed for life, and will never decrease.
Pros of Guaranteed Life Annuities
Cons of Guaranteed Life Annuities
Living annuities provide pensioners with an income from their retirement savings, offering flexible investment choices and withdrawal rates. In exchange for this flexibility, pensioners take on the risk that they may outlive their savings or experience poor investment returns (known as longevity and investment risk).
Pros of Living Annuities
Cons of Living Annuities