IN ITS simplest form, an annuity is an insurance product, which, in return for a lump sum payment, buys you a regular income for the rest of your life. It is one of the world’s oldest financial products, and examples can be found in Roman times.
Up until April 2011, anyone with a defined contribution (DC) pension had to use their fund to purchase an annuity by age 75.
This law was controversial and campaigners long sought its abolition, citing annuities’ inflexibility, not least the fact that the decision to buy, once made, was irrevocable and in many cases when you died, the annuity died with you.
The abolition of compulsory annuity
