Three tips for the potential annuitant

First, you must investigate exercising your open market option and taking your pension to the Life Company that will give you the best annuity deal. Even if you’re in a money purchase occupational scheme, you still have the right to buy the annuity from the life company which offers you the best deal, and not just one from the Life Company that manages the pension fund. Use this option - don’t be persuaded otherwise.

Secondly, don't pick an annuity without first taking advice. If you’re coming up to retirement and need income, take your pension pot to someone who knows where the best deal of that day is available.

The final tip only concerns you if you have a portfolio of investments. If this is the case, don’t consider taking an annuity income from your investments without independent advice, if you can avoid it.

Unless you bought a joint life annuity, the income - and the capital - will die with you. An annuity isn’t something you can pass onto your surviving family, but an investment portfolio is. Therefore, don’t prune your investments - reinvest income from bonds and any dividends.