Buying a pension annuity converts the money you have saved in your pension into a regular income. Annuities give you the security of knowing that you will always have an income and not outlive your pension savings.
If you have a private pension or ‘money purchase’ company pension you’ll be able to take some of the cash you’ve accumulated as a tax-free lump sum, typically up to 25%. All or part of the rest can be used to buy your annuity.
Conventional and enhanced annuities will guarantee you an income for life while investment linked, fixed term or temporary annuities can increase or decrease your funds.