PRT Terminology: Retirement Glossary Terms

As new or soon-to-be retirees embark upon and continue their retirement journey, it is important to become familiar with glossary terms that you will need to know to help make informed decisions about your pension benefits. Below you will find terms relating to pensions and annuities to help you navigate your retirement and provide further understanding.

Annuitant

The individual who receives the payments from an annuity. The amount and duration of payments are often based on the life expectancy of the person who participated in the employer’s pension plan.

Beneficiary

A beneficiary is the person(s) who will receive money upon the Annuitant’s death. The Annuitant decides who the beneficiary will be. The person who would potentially receive money upon the annuitant’s death depending on several factors.

Pension Annuity

This is a company benefit provided to the employee by the employer based on service. A pension annuity is a regular payment that can be for a specified period or for the lifetime of the annuitant.

Life Annuity with Period Certain

Periodic payments are made until the later of Annuitant’s death and the end of an elected guaranteed payment period (i.e 10 years). If the Annuitant passes away prior to the end of the elected guaranteed payment period, the beneficiary(ies) will receive the remaining guaranteed payments.

Deferred Annuity

A pension payment that is often delayed until a future date based on eligibility or choosing to wait until one’s normal retirement date, allowing the investment to grow over time. Payments can begin several years after the premium is paid.

Joint and Survivor Annuity

An annuity that continues to make payments until the death of both the Annuitant and a designated survivor (sometimes referred to as a contingent annuitant). Some plans may require this to have been a spouse.

Life Annuity

An annuity that is paid to an Annuitant for their lifetime. When the Annuitant
dies, the payment will cease. There is no beneficiary.

Certain Period Only Annuity

Periodic payments are made to the Annuitant until the end of an elected certain period ( i.e 10 years). If the Annuitant passes away before the end of the certain period, the remaining periodic payments are made to the beneficiary(ies). Payments during the selected payment period are guaranteed, but once the payment period ends, all payments cease.

Social Security Level Income Annuity

A Social Security Level Income Annuity provides periodic benefit payments to the annuitant with the primary portion of the payment shifted to the earlier years of retirement, before social security eligibility. Typically, the difference in payment amount is based on an assumed amount that social security would have paid.

Lump Sum Distribution

A one-time payment made to an annuitant representing the value of their pension benefits. This may be offered in certain circumstances during a pension plan or offered during a lump sum window by the plan sponsor.