A pension Annuity is a product that guarantees to pay you a regular income for the rest of your life, regardless of how long you live. It is a way of making sure you have secured enough income to live off. It is a long-term investment that is issued by an insurance company which is designed to help protect you from the risk of outliving your income. The difference between an annuity and a pension is that you decide to purchase an annuity after you retire to provide you with the regular income, whereas you save into a pension pot throughout your life, which you then need to decide how much you draw from it to supplement your income.
Below is a short breakdown of the different types of annuities you can purchase:
Pros of purchasing an Annuity
Potential drawbacks of Annuities
Is an Annuity suitable for me?
An annuity may be the right option for you if you would like a guaranteed income in retirement and are sure of how much you will need. However, before you purchase an annuity it is important to fully understand the plan fully and all the associated fees. Recently, pension annuities have become a lot more popular, as people want to be extra safe in knowing that their money won’t run out during retirement, particularly due to the market’s recent volatility and uncertainty. It is a way for the investors to be in control of how much income they would like to take, and the risk they are willing to take.
Written by: Jemma Long
Date: 11 November 2022