Annuities

Advantages

• An annuity is the only solution that can guarantee you an income for life
• You can choose to provide for your partner or spouse when you die and also opt for an income that increases each year
• You can select an annuity that will boost your income if you suffer from a medical condition or lead a lifestyle that could shorten your life expectancy

Disadvantages

• Buying an annuity is an irreversible decision that cannot be changed
• Generally, no payment is made after your death, although there are options that can provide payments to spouses and/or dependents
• Whilst payments from an annuity are guaranteed, you will not benefit from any potential market growth
• If you want an income that increases with inflation this can be expensive to buy

Pension drawdown

Advantages

• You will have control over your savings and how they are invested
• You can manage your money with the aim of generating further growth or to beat the effects of inflation
• You can make changes to the income you receive
• You will be able to pass any remaining funds in your pension pot on to your next of kin

Disadvantages

• Pension drawdown income is not guaranteed and there is a risk that you may run out of money in retirement
• If your investments perform poorly you may need to reduce the income you take
• You will need to regularly review your investments to ensure you are still on track
• If you plan to buy an annuity later in life, annuity rates may be lower than they are currently