Annuity

Definition and Meaning

A person invests money into an annuity (usually on behalf of themselves or someone else), where the annuity will pay them a set income over a period of time in exchange for the original investment (or contributions) they made. In HR/Staffing/Employee benefits, annuities are generally associated with retirement planning, pension plans and long-term financial stability.

Human Resource Key Highlights

• Support Retirement Benefits for Employees Financial Planning Long-Term
• Typically Associated With Pension Plans and Superannuation Plans
• Provides Ongoing Income After Retirement To Employees
• Improves Overall Benefits Structure for Employees
• Is also a Factor in Compensation Planning for senior-level employees

Legal Compliance

Annuities issued in India fall under many and varied financial and tax laws, including but not limited to:

• The Income Tax Act of 1961 (tax implications for annuity income).
• Pension and superannuation plans are offered through an employer.
• The regulations from the IRDAI continue to govern the sale and administration of annuity products by insurance companies.

Human Resources staff should be sure to inform employees of the tax treatment and payment structure relating to annuity products.