Investment-linked living annuity: you choose where to invest your savings and are entitled by law to draw an income of between 2.5% and 17.5% of the capital each year; Guaranteed or life annuities can be: Level: the same income for life; Escalating: the income increases annually by a fixed percentage such as 5% or 6%; Inflation-linked: the pension increases annually by the rate of inflation; With-profit: the income increases in line with profits made on the underlying portfolio, which is exposed to equities, bonds, cash and listed property. These annuities have a choice of post-retirement interest rate; the lower the rate, the more aggressive are the investments and the higher your future returns; or Impaired life: these pay a higher pension to you because you are sick or a smoker, and your life expectancy is lower. The inflation-linked annuity will pay the lowest income initially but, after inflation, it will overtake the level annuity in terms of the income paid. Guaranteed annuit...
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