# Why RRSP Annuities Pay More then Non-RRSP Annuities



## OptsyEagle (Nov 29, 2009)

Would anyone know why insurance companies pay out a higher monthly income for registered annuities then they do for non-registered annuities. You would think that the insurance company would not care about whether the money was registered or not.

Here is a site that quotes monthly annuities payouts per $100,000. If you click on the left side for non-registered annuities and then click on the right side for registered, you will see a different payout amount, for the same insurance company. I used Single Life Male, no guarantee.

http://www.globeinvestor.com/servle...SL&sex=M&fund_type=N&province_of_residence=ON

I know this happens I just don't know why. Anyone have any thoughts on this?


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## NorthernRaven (Aug 4, 2010)

It might be that the competition is different for registered and unregistered money. There might be more (or less) registered money out there, or unregistered money is harder to persuade to annuitize. They probably get sold through different channels - registered probably goes through retirement planners and whatnot, non-registered more to lawsuit settlements, or gangsters setting up their mistresses for life (Boardwalk Empire ). Just guesses. 

I'm trying to think if there would be something about the two types that companies would want to balance them for some reason (like banks want to balance deposit/loan maturities), although I can't think of anything offhand. There would be no difference in what type of bonds or whatever that the two monies are invested in, right?


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## OptsyEagle (Nov 29, 2009)

Perhaps because the RRSP has more of a tax bite to the owner, they figure it will tax them to an early death. lol.

It's quite a mystery to me.


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## My Own Advisor (Sep 24, 2012)

A good article about annuities:
http://retirehappy.ca/everything-you-need-to-know-about-life/


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## moisimplementmoi (Oct 20, 2014)

not sure if your still looking for the answer, but the assumption is one of life expectancy from the part of the insurer in the group who are purchasing the products. There is an assumption that if someone is annuitising Non-Registered money, they know they are a better health, because they would keep the cash if not (even worse if they are electing non guarantee, i actually always thought someone electing no guarantee worse risk than one who picked some form of guarantee (antiselection)). Add to fact that part of the Registered portion includes Locked-in amount, where people have less perceived choice for vehicles especially if looking for something that looks like a pension. 
There is also probably an assumption as to the population who would have enough NR funds, vs RRSP which would include all workers.


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