An annuity pays you an income for life in return for a lump sum (your pension fund). You have the right to take your pension fund to any annuity provider in the market under the 'open market option'. Therefore you are able to seek out the best rate for the type of annuity you require – not simply accept an annuity from the pension plan provider.

Annuities can be taken in different forms: on a single life, joint life, escalating (increasing with earnings) or RPI linked (rising in line with inflation) basis. Plan carefully, because the decision to purchase an annuity is irreversible - once you have bought an annuity, it is for life - you cannot change your mind and switch to a different provider later.

The level of income you receive depends on your age, sex, life expectancy, state of health, where you live and prevailing annuity rates. As of November 1999, the average annuity rate for a male, single life annuity is currently around 8.5%. So if you have a £100,000 pension an 8.5% annuity rate will provide an income of £8,500 per year before tax.

You don't have to buy an annuity when you retire. If you have other sources of income, you can postpone taking an annuity until you are older (when you will get a better rate because of your reduced life expectancy).

If you have pension fund of at least £200,000 you can take income drawdown, whereby your pension fund remains invested and you withdraw an income each year within strict Inland Revenue limits. But you must have bought an annuity by the time you are 75.

Norwich Union has a number of different insurance products available to assist you in providing this income. They have been designed to fit certain circumstances and, in the right combination, they will help ensure that your retirement will be financially secure.

You may have been contributing to your pension through the State Earnings Related Pension Scheme (SERPS), with payments coming from your National Insurance contributions. Or you may have been making payments through an Occupational Pension Scheme set up by your employer. Or you could have been making contributions into your own Personal Pension.

Wherever and however you are making pension contributions, when you reach your retirement age, you will be faced with an important decision about what to do next and how to provide the income that you will need in your retirement.

You should seek Independent financial advice to ensure that you have the right product's for your own specific needs.

A pension annuity can help give you certainty and security by giving you an income in retirement. It is bought with the pension funds you have accumulated.

There are a range of annuities with a variety of features and benefits, providing different ways of providing an income in retirement.

Payments will be paid for the rest of your life and optional features include benefits to your spouse and/or dependants after your death.

You can also fix payments at a certain level or allow them to increase each year in line with inflation or at an agreed rate.

With the long term market view that equities should outperform fixed interest investments, now could be the time to look at our With Profits Annuity and see how it compares to conventional annuities.

When you retire you can take part of your pension fund as a tax free lump sum. For Personal Pension Plans you can take up to 25% of the value of your fund. In Occupational Pension Schemes the maximum tax free cash amount available is based on your salary history and years of service with the employer, rather than a percentage of the fund.

As an alternative to buying a pension annuity with your accumulated pension fund, you can withdraw a selected level of income directly from the fund.

The concept behind phased retirement is to give you the opportunity to retire in stages. You can take your retirement benefits at different times rather than all at once. This gives you the option as to when to purchase your Annuity.

There are lots of things for you to think about. We have highlighted some of the key issues and products that you and your financial adviser need to consider. They will point you in the right direction and help you find a pension annuity to suit you.

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