An annuity is a product which provides an income for life. In fact, it guarantees an income for life. When you buy an annuity you are essentially paying for a sum of cash to be paid to you at regular intervals after you retire and until you die.
To buy an annuity you need to have been paying money into a pension fund whilst you have been earning an income during your working years. Upon reaching retirement you will have built up a pension pot and this can be used to buy an annuity.
You can buy your annuity from the company which provided your pension. Or you can go elsewhere, to another provider, where you might find better rates.
How your annuity is paid depends on your circumstances. If you would like your partner to benefit from your annuity after you die you can buy a joint-life annuity, if you want to be the sole beneficiary – you can buy a single-life annuity. You can also buy annuities which pay more as you get older, or which pay set amounts at different stages in your retired life.
- 1500 reasons why you could consider buying an enhanced annuity
- Record drop in annuity rates risks success of auto-enrolment
- What will happen to annuity rates in 2012?
- LV= boosts investment linked annuity rates
- ‘Opaque’ annuity system costing pensioners £1bn a year
- Retirement income gender gap narrowing as annuity rates fall
- MGM: Annuity rates have plunged 11.2% since June 2009
- LV= launches Pension Income Plus Annuity
- ABI urges Britons to shop around for the best annuity
- Annuity rates fall by 8% in 2011 hitting retirement incomes