Is your annuity paying out? Here's what you need to know

As an entrepreneur, you do not automatically build up a pension. Therefore, it is advisable to arrange a supplement to your AOW yourself. This can take various forms. Annuity insurance is one of the options often chosen at the turn of the century. Did you also start with an annuity insurance at that time? Then the end date is now approaching.

After the end date of the insurance, you will receive a benefit with which to purchase an annuity. That is how it was laid down at the time. Meanwhile, there are several alternatives. It is useful to look at all the options before deciding on your annuity, perhaps there are now options that better suit your situation.

Depending on interest rates

The insurer basically gives you two options: a temporary benefit or a lifetime benefit. With the first option, you receive a monthly benefit for 10 or 15 years, for example. The second option obviously runs your entire life. The amount of this benefit depends on the interest rate. The lower the interest rate, the lower the benefit.

The Internal Revenue Service considers the monthly payment as income, so you have to pay tax on it. How high the tax rate is depends on your total income.

Banksparen

But you don't necessarily have to have your annuity insurance paid out. You can also extend the current insurance. You can then even change insurers or choose a new form of savings, such as bank savings. This is a widely chosen way these days.

With bank savings, you can choose between a retirement annuity and a temporary retirement annuity. Each form has its own conditions. A lifelong retirement annuity is not possible with bank saving. When you die, the benefit stops. The balance then goes to your next of kin.

More efficiency

In general, bank savings provide more returns than your annuity insurance payout. Because of the lower costs, your payout with bank savings is often even higher. That is why many entrepreneurs switch to this alternative after their annuity insurance has expired.

Old regulations

Some annuity insurance policies still fall under an old regulation. This applies to policies taken out before 1992 and premium-paying annuity policies taken out before October 16, 1990. Here you are not obliged to purchase an annuity. You can use the money in another way. For example, there are policies that allow you to donate the saved amount to someone.

More information

Do you also want to have your old age well taken care of? There are several options for that. It is important to see what suits your personal situation best. Would you like personal advice? Then contact us. We will gladly help you.