An annuity provides you with a guaranteed income (usually for life). You can take some or all of the tax-free cash from your pension first and then use some or all of the remaining money to buy an annuity (usually from an insurance company). The income you receive will be taxable, just like any other earned income.
There are many different types of annuities, so it’s good idea to shop around to find the best deal. You will also have some decisions to make as to what type of annuity is best for you.
The government's Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online at www.pensionwise.gov.uk or over the telephone on 0800 138 3944.
The value of investments can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular product, service or course of action.