ANNUITIES / MONEY NEWS
Paul Lewis
If you’re looking for security in retirement, an annuity might be the answer. And right now, with rates rising, they could be a safe bet, as our columnist explains
Annuities are back in fashion. Rates paid have been rising and many advisers are recommending them again. If you have money in a pension fund that you drawdown, using some of it to fix a guaranteed income for life could be worth considering.
An annuity is a simple product. You give an insurance company a lump sum from your pension fund and in return it gives you a guaranteed income for the rest of your life – however long or short a time you live. Like all insurance products it is a gamble: if you live longer than average you win; if you die early, the insurer wins.
However, for relatively little cost, annuities can be guaranteed for a fixed number of years that can cover the whole of your remaining average lifespan – or longer. These guaranteed products are often the best value.