What an annuity is
You pay an insurer a lump sum once, and it pays you a fixed pension for life. The rate depends on your age, interest rates when you buy, and the type you choose. It stays the same for life, which is both its strength (it never runs out) and its weakness (inflation cuts what it buys every year).
- Life annuity: the highest pension; nothing is left for your family.
- Return of purchase price: a lower pension; the lump sum goes to your nominee.
- Joint life: continues for your spouse after you.
Annuity or a withdrawal plan?
A systematic withdrawal plan keeps your money invested and lets you change the amount, but it can run out if returns are poor or you live long. Many retirees use both: an annuity for essential costs, withdrawals for the rest. Compare the rate with SCSS too.
Get quotes from insurers for your age before deciding; this page doesn't recommend any.
Results are estimates for illustration only, not financial advice. Banks and schemes may round, apply TDS or use slightly different day counts — confirm figures with your bank or employer. Written by the Welthr team; last reviewed on .