Annuity Hound

Any annuity that does not pay an income to the annuitant (recipient of the annuity income) for the entire remainder of their life is known as a temporary annuity. Temporary annuities can be used for education fee funding, if certainty of income is wanted, although such educational financial plans may not keep up with education fee inflation, which typically runs at more than 10% p.a.Education fee annuities are often purchased with fixed terms designed to cover educational expenses over a defined period.

Temporary annuities can also be used in combination with traditional investment portfolios as an alternative to converting the entire pension fund into a lifetime annuity. This combination retirement income strategy is known in the UK as ‘phased retirement’ and under UK pension regulations is available only up to age 75.