Is it still possible to buy an annuity when I retire?

QAIn a few months’ time I will be retiring and am confused about the best way to turn my pension fund into an income. I keep reading about income drawdown but it sounds too risky for me and I don’t want the bother of making investment decisions in retirement. Is it possible to still buy an annuity? WHEN George Osborne overhauled the pension rules last year he ended the restrictions that forced many people to buy an annuity with their pension pot.

The demise of annuities was widely predicted in light of these reforms, amid criticism that they offered poor value.

However, annuities, where a retiree is paid an income for life in exchange for their accrued pension fund, are still alive and kicking.

For retirees who like the security of a set income for life without investment risk – and it sounds like you might be one of them – an annuity may still be the most sensible choice.

Income drawdown provides more flexibility and the opportunity to benefit from possible growth in investment markets but not the certainty of a defined income.

With income drawdown you will also face ongoing investment fees, whereas once you have bought an annuity there are no ongoing adviser charges.

Annuities can particularly suit those with smaller pension pots due to the higher charges associated with drawdown.

How much income you get from an annuity will depend on factors including your age and your health.

If you suffer from a serious medical condition, are obese or have a long history of smoking, you may be able to apply for an “impaired” or “enhanced” annuity.

These pay a higher level of income to reflect a presumed reduced life expectancy.

Buying an annuity used to be a decision you could not reverse.

However, a new “second-hand” market may enable you to sell your annuity for a lump sum from April 2017.