The annuity is paid to an individual, the Annuitant, from a capital entrusted to a life insurer. During the annuity payments, capital decreases progressively with arrears of pension served, but it also increases financial income from the investment of capital.
To determine an annuity, the insurance manager is allowed to add to seed some of the products that generate hope in order to increase the backlog annuity starting. The interest rate that the insurer "tax" in the calculation is the technical annuity rates.
Financial products are checked off in the annuity acquired annuitant. Technical annuity rates is a form of guaranteed minimum rate of return.
The pension is proportional to technical annuity rates
More technical annuity rate, the higher the first arrears of rent is high and vice versa. In parallel, the revaluation of the pension will be even weaker than the technical interest rate will be high. See our simulation tool.
The technical rate reduces the revaluation of pension
With technical annuity rates, the insurer withholding a part of the financial products it expects to emerge on the investment of the capital annuity. Financial income actually generated by the insurer gives rise to a revaluation of the pension beyond naturally the level of interest bearing notes already in the annuity. Therefore, upgrading is even weaker than the technical annuity rate is high, and vice versa. See our simulation tool.
Technical annuity rate is regulated
A capital equal, it is obviously easier to sell a higher pension. To prevent possible slippages damaging forward to the Annuitant, the level of technical annuity rate is capped by regulation. The ceiling is based on the level of interest rates on government bonds, each insurer is free to define equal or less than this maximum technical interest rate.
Choose a technical annuity rates
the point of view of the annuitant
The choice of technology depends on rate of personal considerations:
take the technical rate as high as possible:
for the proponents of "a bird in hand is worth two in the bush" indifferent to their eventual survival beyond the statistical age that maximizes their earnings over the entire period.
for advocates of higher spending on early retirement, when they are still in great shape, to believe in "better burn that last" less aware of their income late retirement take the lowest possible technical level
for sighted wishing a better level of their retirement pension at the end with a greater appreciation, for convinced of their survival beyond the statistical age that maximizes their earnings over the entire period
High technical annuity rate increases thus increasing the capital income. The employer then sees his financial burden increase.
A high technical level underestimates the subsequent revaluation of the pension. Plan participants would benefit from a technical rate maximized.
The employer is totally clear financial implications of the level of technical annuity rates. However, it is affected by the choices made by its employees and their implications on subsequent revaluations of annuities. Technical annuity rate chosen by the employer on behalf of employees can be a good solution, especially as the communication about technical annuity rates is difficult.
The annuitant or annuitant future be able to choose the level of technical interest rate based on personal inclinations. Few collective agreements currently offer this option.