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Annuity Vs Pension

Basis

Annuity

Pension

Meaning

Annuity refers to a financial product in which a fixed/variable sum of money is paid to an individual at regular intervals.

Pension refers to the retirement benefit that only employees of certain companies receive, after they have retired from service.

Type of product

Insurance product

Retirement product

Can it be bought?

An annuity can be purchased from any insurance company.

Pension cannot be generally purchased, since the company makes pay-outs to ex-employees.

Volatility

Annuity payment may be fixed or variable, depending on the contract.

Pension payment is fixed, divided into various intervals.

Calculation

It is calculated on the basis of the amount invested.

It is calculated on the basis of the total amount earned during all the years of service, adjusted for the number of years.

 

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