What is an annuity?
An annuity is an insurance product purchased from your retirement savings to provide you with an income in retirement.
When you use your pension pot to buy an annuity you can take up to 25% tax free, with the income you receive from the annuity being taxed as normal income. The level of income you receive will depend upon: your age, how big your pension pot is, your health and lifestyle, annuity rates at the time you purchase, and the annuity features you choose.
When is an annuity the right option?
Right if you:
Want a fixed guaranteed income
Would like a low risk option
Want an option to protect against inflation
Are in poor health and may qualify for an enhanced annuity
Wrong if you:
Want to vary your income or withdraw ad-hoc lump sums
Want to pass on your fund through future generations
Have a short life expectancy
Would like to keep your money invested for potential growth