Pension annuities are special type of annuities that the annuitant gets after his or her retirement. There is a wide array of pension plans created by and for the employers. Usually an individual worker can either withdraw a partial payment as he or she thinks fit, can receive a pension annuity payment.
A pension annuity pays an individual a specific amount of money every year from his or her pension fund. The employer usually assures yearly annuity payments on retirement. Such payments can continue for the rest life of the individual or recipient or till the annuity is run out of money.
An employer generally buys a pension annuity for employees who use individual pension fund originated from defined contributions. Such defined contribution pension policies are designed by the employees and involve investments into the fund over the period of employment. Once an individual employee retires, those funds in the account are utilized to buy an annuity for that individual employee.
A pension annuity is usually funded by the individual account that has been deposited over a period of employment of an individual employee, and not deposited directly into an annuity till after his or her retirement. The pension annuity then pays back the individual retiree a yearly payment for his or her remaining lifetime or till the annuity runs out of money. The mode of payment typically depends on the kind of annuity bought.
Usually, the sum of money paid out of an annuity account depends on the amount of money paid into a pension annuity. Both the annuities and pension funds have changeable types of plans which can depend on the individual, employer and the funds available.