An annuity has a magnetic attraction because the money only runs out when you die. But is it really the hedge against becoming penniless that you think it is and are there better alternatives? Until recently, nobody bothered to ask this question since the pension rules were clear: take the 25 per cent tax-free lump sum now and annuitise the rest.
Lew Mayhew takes a look at the benefits of annuity versus pension drawdowns, and explores which pension option is better.
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This article first appeared in Financial World
, the journal for The London Institute of Banking & Finance.