A lifetime annuity blends the benefit of guaranteed income with simplicity:

• Guaranteed income for the rest of your life.

• Ideal if you don’t want to subject your pension savings to investment risk

• Peace of mind that your money won’t run out.

• No need to monitor and manage investment performance.

Lifetime annuities also give you the option of death benefits, where someone else receives some or all of your pension when you pass away. Typically, choosing to add death benefits to your annuity will reduce the level of regular income you receive while you are alive.

One more thing to mention is that a conventional lifetime annuity is based on the assumption that you don’t have any significant health problems or make certain lifestyle choices such as smoking. However, you could be eligible for more income with an enhanced annuity if you have a history of certain medical conditions or lifestyle choices.

• Once it’s set up, you typically can’t change your lifetime annuity or opt for a different income product.

• Inflation reduces the real value of a level annuity income over time.

• By default, a lifetime annuity won’t have death benefits and when you die the income payments stop. However, as mentioned above, you can choose to include death benefits in your annuity.

• You won’t benefit from investment growth on your pension fund: with an annuity you swap investment ups and downs for guaranteed income.

• Some older pension schemes may come with 'safeguarded benefits' such as a guaranteed annuity rate (GAR) or guaranteed minimum pension (GMP) that could pay more income than you'd get elsewhere. Also, some schemes let you take more than the standard 25% tax-free cash lump sum. Always check whether you have any safeguarded benefits and, if you do, take that into account when comparing what your scheme offers with what's available from annuity providers.