If you’re close to retirement or have retired and using your pension for drawdown, should you consider a pension annuity?
A pension annuity is where you use the funds inside your defined contribution pension to purchase a guaranteed income for the rest of your life.
Pension annuities have had a bad reputation over the last 10 years or so, mainly for two reasons:
- Interest rates have been historically low and this has led to lower amounts of income offered.
- There is no legacy to pass on to your children.
Both of the above reasons still hold true today. But if your objectives are slightly different, perhaps you don’t have children, or you already have other assets to leave to your children, you might just want to at least consider a pension annuity.