How the retirement benefits are paid from a Defined benefit scheme?
The employee who holds the policy has the benefit of choosing the method of payment in most of the defined benefit plans. Some of the payment options offered by this plan are as follows,
A Single life annuity
A Lump sum payment
A qualified survivor and joint annuity
A single-life annuity:
This option helps the employee to get a benefit of a fixed amount for every month until the employee lives. After the death of the employee, there are no benefits of payments to the spouse or any dependents.
A Lump sum payment:
This type of payment helps the employee to get his/her entire amount of the plan in the form of a lump sum. There are no further payments for the employee or for his dependents when the policyholder dies.
A qualified survivor and joint annuity:
The employee gets a benefit of fixed income for every month until the employee dies and thereafter it allows the surviving spouse to continue receiving the benefits for every month until he/she lives. The pension or retirement benefit to the spouse is at least 50% of the pay-out of benefits of the employee.
It is important to choose the correct payment option as it may influence the amount of benefit that the employee ultimately gets. It is recommended to go through all the options carefully and should compare every option regarding the amount of benefit offered by every option.
Read More: https://finalsalarypensionuk.medium.com/a-comprehensive-guide-to-your-defined-benefit-pension-plans-729889622f1a
