A pension annuity (often referred to simply as an annuity) is a product purchased with the proceeds of a pension plan which pays a guaranteed, regular income for life. The income payable from this type of annuity is not linked to the performance of investments.
Annuities can also have several optional features attached to them. (These options can for example include an income which rises with inflation, a benefit for your spouse or dependents in the event of your death, etc.) It is important that you take independent financial advice before purchasing an annuity – as you need to ensure you have the right features included.