Advantages and disadvantages

You have the security of knowing what income you will be receiving for the rest of your life

Once you have secured your enhanced annuity you cannot change it even if your personal circumstances change or inflation - the cost of living - rises steeply

The annuity you receive is likely to be higher than a standard annuity. Qualifying for an enhanced annuity could typically mean an increase in your retirement income of around 43%* or sometimes even higher when compared to the lowest standard annuity. Whether you could receive more or less than this depends on the specific health or lifestyle condition(s) you have

If you die relatively soon after taking out the annuity, the money used to fund its purchase cannot be returned – even if you have only received a fraction back from the annuity provider as income payments.

You can choose to protect against this happening but it will mean having a smaller income from the outset

You can usually take up to 25% of your pension pot as a tax free lump sum (now known as the Pension Commencement Lump Sum or PCLS) before you purchase the annuity

You can include options to protect against inflation, provide for a spouse or dependants or provide for your annuity to continue for a guarantee period after your death  but selecting these options can mean a lower initial income

You have the security of knowing that you will never spend all your pension savings and you will always have an income