IN THE BACK
In a perfect world , with a looming financial crisis , you ’ d tip enough of your retirement pot into a fixedterm annuity to provide an income to live on
annuity sales are rising again and that these almost-forgotten products are a good hedge against choppy markets . Is this interest in annuities just a flash in the pan given poor equity markets and rising interest rates , or are they worth holding over the longer term ?
Back to basics Let ’ s remind ourselves about annuities and consider how they can fit into a modern retirement plan . An annuity provides you with a regular guaranteed income in retirement until you die . You can buy one of these products with all or part of your pension pot . It will either pay you an income for life or an agreed number of years . When you use money from your pension pot to buy an annuity , you can take up to a quarter ( 25 %) of the amount tax-free . You can then use the rest to buy the annuity , and the income you receive is taxed as earnings .
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