You can receive a regular income from your pension pot with an annuity. An annuity pays you a guaranteed amount monthly, quarterly, half-yearly or yearly – with the guarantee that the money won’t run out before you die.
Once you’ve bought an annuity, your money is tied up for a set amount of time, often for the rest of your life.
There are different types of annuity available. For example, annuity payments that increase in line with inflation or at a set level over time; annuities that pay an income to a loved one after your death and annuities that pay out for a set number of years, even if you die during that time.
You can shop around for the best type of annuity and income for you. If your pension provider can’t offer you a certain type of annuity, you can choose a different provider. This is known as the open market option.
If your health or lifestyle is expected to reduce your life expectancy, you may qualify for an enhanced annuity and potentially receive a better income than someone without health problems.