Withdrawal is one of the two principal ‘retirement products’ specified by the PRA 2014. It is a product offered by PFA for a periodic payments to a retiree. It is a structured periodic withdrawal based on the peculiarities of the retiree. The Retirement Savings Account , balance is spread over expected life span of a retiree.On the other hand, Annuity Plan is an income replacement product offered to retirees by Insurance Company.
A retiree negotiates with insurance company, obtains Annuity Provisional Agreement from the life insurer, which shows premium, monthly annuity guarantee terms, among others. Money leaves RSA to insurance company to pay premium after lump sum payment. The insurance company then commence payment of monthly annuity/pension to retiree.However, lump sum is applicable to both Annuity and Programmed Withdrawal.
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