A pension annuity is a contract in which you give up your pension pot fully or partially in exchange for a guaranteed regular income over a set term.
The term for your secured income can be anything from one year up to an entire lifetime. If you only need guaranteed income for a short period, or you would prefer not to commit to a lifetime annuity then you do not have to exchange your pension pot in one go and can instead use part of your pension pot to purchase a short-term annuity.
You need to consider your other assets that can provide you with retirement income and whether they are guaranteed.
Income in retirement can come from many sources other than a pension such as rental income from property, investment income, direct/company shares, inheritance, and of course, any cash reserves you have.
The amount of income these can provide, and to what degree that income is guaranteed, can help build you a picture for your retirement provision and where a secured income can fit in.
A good starting point would be to determine how much income you would need on an annual basis in retirement and whether you would prefer a guaranteed or non-guaranteed option, or a mixture of the two.
Without the right advice, it can be very difficult to firstly decide whether an annuity is the right option for you, and secondly to choose the best one. This is where one of our advisors can help to give you clarity, and will be able to offer possible solutions that are both unbiased and bespoke.