Current Size: 100%
What kinds of annuities are there?
Annuities provide a great deal of choice about how your retirement income is structured. You can choose to:
- take the same amount of cash every year – so the value of your pension will be higher at first but it will buy less in future as inflation eats into it;
- have the pension rise in value each year – either a fixed amount or tied in some way to the cost of living;
- have an investment-linked annuity that can go up or down depending on its investments;
- have a guaranteed period (often five years) so your full pension is paid for this period to your surviving dependants even if you die first;
- provide survivor's benefits (or not); and
- provide a range of levels of survivor's benefits.
Of course you have to pay to protect your dependants or secure guarantees against future inflation. You do this by getting a smaller pension at first. If you have a medical condition, smoke or are overweight, you may be able to get a better annuity rate as your life expectancy will not be as great.