Retirement Pension Plan – An Effective Annuity Scheme For The Retirees

To secure the life of the old aged individuals after retirement, several forms of plans have been introduced. Annuity is a scheme that is reckoned as one of the most advantageous forms of the retirement plans, the benefits of which are availed by the individuals when they stop working. An annuity is defined as distribution of the money that an individual earns on an investment that he makes. This amount that he receives is set on certain schedule, which might be quarterly, biannually or annually based. The retirement pension plan is the most popular annuity scheme which provides for a significant return on investment to the retirees.

The annuity investment that the individuals make can either be in the form of installments or they can even buy an it with a lump sum. An involvement in this scheme secures the life of old aged individuals as they are free to use the funds throughout their life, till their last breath. When this retirement pension plan is established, the annuitants are required to sign a contract specifying all the terms and conditions, which the individuals are expected to go through properly. These contracts also reveal the time period that it covers along with the details on whether it will get fixed in later stages.

Two types of annuities are offered by the insurance companies. Among them, one is the fixed annuity, which is considered as a safer investment. This is because it provides a fixed amount of return on each investment that a person makes. While variable annuity, the other form of retirement pension plan provide payments based on the performance of the investments in making more and more money. The annuity schemes are ceased as soon as the annuitant dies, but in certain circumstances where the minor children of the annuitant or his or her spouse is involved, the payment may continue even after the original annuitant expires.