Explaining annuities

An annuity is a product, that gives a guaranteed income for the rest of your life or for a set number of years. You have to be aged 55 or over to buy one.

It could provide an income just for you, or to your spouse or partner after you die. The amount you get might stay the same or it could increase each year to help cover any rises in living costs.

There are lots of different types of annuities and options to choose from. In this guide we’ll explain the different types of annuity that give you an income in your retirement and show you where to find out more.

Before you retire , your provider should send you all the information about the options they can offer you, including an annuity. It should show any special or guaranteed rates you’ll get by choosing their product, which could give you a higher income and more flexibility than anything you could find on the open market. You should also check if those rates or any other special features would be affected if you chose to wait a while before you access your pension savings.

It’s also important to give accurate personal health information, as this may help give you a higher income (known as an enhanced annuity).

With this in mind, it’s always important to shopping around all providers and get as much guidance and advice as you need before you make any decision.

You'll need to be certain of the choices you make as you can't change your mind once the cancellation period ends and your Pension Annuity has started.

For help to shop around you can speak to Pension Wise, which is a service from MoneyHelper backed by the government. They offer free impartial guidance to people aged over 50. You can also take independent financial advice. You’ll find an independent financial adviser near you on Unbiased.