![]() ![]() However, if you continue to live for forty years after retirement, you would continue to receive your guaranteed monthly income even if you have reached and surpassed the original value of your fund. With an annuity, if you pass away after five years, for example, your annuity provider would keep the remainder of your pension pot, unless you purchased additional death benefits at the outset. It converts your pension pot in to a guaranteed regular income every month for your whole life. Many people rely on the financial security of a fixed monthly income, particularly if wanting to maintain a certain lifestyle in retirement that relies on a guaranteed income each month.Īn annuity is purchased with the money built up in your pension fund throughout your career. So, to help you work out which might be best for you, here is our impartial quick guide to traditional annuities vs drawdown. You might be wondering what the difference is between a traditional annuity and a drawdown product. You can take 25 per cent of your fund tax-free and the rest can be taken as either an annuity, drawdown or cash (taxed at your marginal rate) – or a combination of the three. Pension freedoms over the last year have dramatically changed the way retirement savings can be accessed and used. If you are due to retire soon then you may currently be negotiating the minefield of pension options in front of you – and the choice you potentially face between annuities and drawdown products. ![]()
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