Buying an annuity means giving up the capital that you have built up in exchange for an income for life.  On death, the capital is lost.

With Income Drawdown, now also known as "Unsecured Pension", the funds remain invested, and you can draw an income up to a certain percentage of the total fund value.

The advantages of this are that you can retain your capital, and there is the possibility of further growth, and ultimately a higher overall retirement income.

If you delay the purchase of an annuity, you could get a higher rate because you will be older.  However, annuity rates generally could fall in the meantime, reducing this benefit.

Income drawdown does carry some risk - if you draw a high income, there is a strong likelihood of depleting the capital.  Also, the value of the underlying investments can fall as well as rise, which might mean that your income is reduced later on.

There are normally two ways of organising this - either with a life assurance company, or through a Self-Invested Personal Pension.

The decision is a complex one, and we will take your full circumstances into account before making a recommendation.