Annuity
A lifetime annuity is a type of insurance policy that pays you a regular income for the rest of your life, in exchange for a lump sum. You can use all or part of your pension to buy an annuity.
When buying an annuity, you can choose whether the level of payment will stay the same, rise with inflation, or drop off later. If you like, you can also buy an annuity that pays your spouse an income after you die. These options must be chosen at the start.
The amount you receive from an annuity depends on your age, the size of your pension fund, and in some cases, your state of health. Once you buy an annuity, you’ll no longer have any say over how your pension is invested – but you will have the security of knowing your income will continue for the rest of your life.
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