annuiteedi

Annuiteetti, sometimes written annuiteedi in some sources, refers to a contract or financial product that guarantees a series of periodic payments in exchange for a premium or lump-sum payment. It is commonly used for retirement planning to convert capital into a steady income stream and to reduce longevity risk—the danger of outliving one’s savings.

There are several common forms. Immediate annuities start payments soon after the contract is entered into, while deferred annuities postpone payments to a future date. Fixed annuities provide level, guaranteed payments, whereas variable or linked annuities tie payments to the performance of underlying investments. Some contracts offer inflation protection or escalating payments, while others are level throughout the payout period. Annuities can be structured to pay for a fixed period, for life, or for a combination of each.

Advantages include predictable cash flow, protection against market volatility for the payout period, and, in some jurisdictions, favorable tax treatment during accumulation or payout phases. Disadvantages can include illiquidity (limited access to principal), fees and surrender charges, credit risk of the issuer, and potential mismatch with rising living costs if inflation protection is absent.

Regulation and tax treatment vary by country. In Finland and the broader European Union, annuity products are subject to financial regulation and consumer protection rules, with supervision by national authorities (such as Finanssivalvonta) and EU frameworks like Solvency II. Tax implications depend on local law and the specific product design.