Income annuities are an ancient idea having a major resurgence in our market. According to LIMRA, total annuity sales in 2011 reached $240 billion. In retirement planning, lifetime income annuities provide safety, security and a guarantee that annuitants will not outlive their income.
But do you know the history of annuities? Did you know they have been around since the Roman Empire? Here is a pictorial history of annuities compiled from Tom Hegna’s book “Pay Checks and Play Checks.”
A.D. 225—A Roman judge produced the first known mortality table for “annua,” which were lifetime stipends made once per year in exchange for a lump-sum payment.
1600s—Tontines become popular with European governments to pay for wars and public works projects. A tontine gave each participant income for life, with the payments increasing to the survivors as the other participants passed away. Payments ceased upon the death of all the participants.
1700s—The British Parliament authorized annuity sales. Annuities became popular among European “high society” as a form of prevention from a fall from grace, unavailable in other more risky investments.
1776—The National Pension Program for Soldiers was passed in America prior to signing the Declaration of Independence. It provided annuity payments to soldiers and their families.
1812—The Pennsylvania Company for the Granting of Annuities was founded.
1905—Andrew Carnegie established the Teacher’s Pension Fund. This eventually became the Teacher’s Insurance and Annuity Association (TIAA) in 1918 to provide annuities to educators. AP Photo.
1930s During the Great Depression, investors looked to annuities and life insurance as safe havens from financial ruin.