Personal pension annuity rates.(REFERENCE)

An annuity is a financial product that converts capital into income. You can buy one with any lump sum of money or you can buy one with accrued pension funds. Currently, for money purchase pension funds, you must buy an annuity by the time you reach age 75. However, most people buy their pension annuity sooner than this, to provide income when they retire.

Types of annuity

Standard annuities provide a risk-free income, guaranteeing to pay a set level of income throughout your lifetime, no matter how long that may be.

Investment-linked annuities, on the other hand, provide growth potential and may outperform standard annuities, but income from them can go down as well as up.

With most annuities, you choose at the outset how you want to be paid and what optional benefits you wish to include. For example, you choose how frequently you want to receive income and whether to provide a continuing income to your partner following your own death.

Rates of income

The rates of income available vary according to the options you select, the date of purchase and your own circumstances, e.g. higher rates of income are available to smokers.