Pensions A-Z
Pensions A-Z is a collection of insights to help you further increase your awareness of pensions law.
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Joint Life Annuity
Members of defined contribution schemes who wish to convert their pension savings into an annuity (in order to provide an income stream) have several choices. Two of these are a "single life annuity" or a "joint life annuity".
A "single life annuity" is an annuity which ceases to pay income on the member's death (unless there is a guarantee period - but this will only pay for a fixed number of years).
By contrast, a "joint life annuity" (which is also referred to as a "joint and survivor" annuity) is an annuity which, on the death of the member, continues to pay a proportion of the member's annuity income to their spouse, partner or dependant for the rest of their life (or, in the case of dependent children, until they reach a certain age). A member must choose the proportion at the time they take out the annuity. The higher the proportion chosen, the higher the cost and the lower the member's annuity income.
As the insurer expects to pay the income for longer, joint life annuities are more expensive than single life annuities.