Buying an annuity is the most common way to convert a pension fund into an income.
However many people don’t realise that you don’t have to accept an annuity if it’s offered by your pension fund provider. You’re entitled to shop around to find the best deal for you. And not all annuities are the same. You can, for example, get a higher income depending on your age and health, and even where you live. Some annuities pay a fixed income, others increase with inflation. Some will pay your spouse or partner if you die first. And, most importantly, different annuity providers may offer to pay you different amounts.
Once you've bought an annuity you cannot change it, (subject to a 30 day cooling off period),so it’s important to understand all your options before making that decision. This section explains the different options available so you can understand them in detail before making a decision.
Any information regarding tax is based on our current understanding of taxation regulations. The rules governing taxation are subject to change and will depend on individual circumstances.