9.6.10 Deprivation Related to Private Annuities

Assessing disposal of private annuities

Deprivation provisions apply to the disposal of a private annuity if a pensioner    

• disposes of the annuity, and
• does not receive adequate financial consideration [4].     More ? [5]

Assessing the amount of disposition

The amount of disposition for a disposed of private annuity is the value at the time of:

• commutation, or
• disposal.

This will generally require an actuarial valuation. If an actuarial valuation was done in the last 24 months, the value of the annuity is:

• this valuation, minus
• any income payments made since valuation.

Example of assessing the amount of disposition

A pensioner has a private annuity valued less than 2 years ago at $100,000. They receive twelve $1,000 payments in a year. The pensioner surrenders the annuity after receiving the sixth payment for that year and does not receive adequate financial consideration. The value of the deprived asset [4] is $100,000 - $6,000 = $94,000.

Income deprivation provisions generally do not apply to disposed of private annuities. Asset deprivation provisions do apply.

Payments forgone

If a pensioner forgoes an annuity payment, the value of the payment is assessed as being received. Therefore, income deprivation provisions apply to all forgone payments.