You may set up a life annuity irrespective of your age. It can be set up by you or by your employer.
Life annuity – contribution
There is no upper limit to the amount contributed if contributions are made via your employer – naturally, however, you can only contribute as much as you earn. You may also choose to make the contributions yourself. In this case, however, special rules apply in relation to deductions, depending on the amount contributed and the contribution period.
Life annuity – disbursement
A life annuity is disbursed as a fixed monthly amount from the date of your early retirement or pension. Disbursements from a life annuity scheme cease upon your death, unless you have purchased personal insurance policies in the form of cover for your spouse or a guarantee that ensures that your spouse or children can take over some of the disbursements after your death.
You may deduct your life annuity contributions from your income, including your income subject to top-bracket tax. When you retire, you must pay tax on the disbursements, which are taxed as personal income.
If payments are made in the period 2011-2019, they can sometimes be covered by the so-called compensatory tax - but only if the total pension payments exceeds 362,800 annually.
Please note that your life annuity disbursements may be offset against any social security benefits.
Financial protection for you and your family
It is important to have the right cover, even while you are still working. It may therefore be a good idea to link personal insurance policies to your life annuity. In addition to protecting your spouse or your children, personal insurance policies may also protect you, for example if you become unable to work.
The amount you contribute should always match your life and your financial situation to ensure that you have the best possible savings solution. Talk to one of our advisers for an overview of your situation.