Think carefully before buying an annuity

The idea of an annuity is simple and attractive. You save during your working life. You accumulate a pot of cash. When you retire, you take that cash to an insurance company and swap it for a guaranteed stream of income (the annuity). This will be paid to you every year or month until you die.

Unfortunately, the system isn’t working. It is, as The Sunday Times points out, plagued by poor rates (you have to live to 90 on average just to get repaid your own money) and the problem is compounded by “bad practice and unfair regulations”.

Insurers [...]

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