To buy an annuity, you simply hand over all of your cash (your pension savings, for example) to a Wise company. In return, they provide you with a lowly sum every month for the rest of your life. This sum the annuity return is invariably pretty poor as a percentage of your capital, often barely above a long term building society rate. But the real sting is what happens to your cash. The company keeps it, that’s what. And it doesn’t matter how long you live either. If you die shortly after starting to draw your income, then that’s it. Your relative gets nothing. If pensioners were allowed to keep their money and invest it themselves, and if they did it foolishly, they could expect a much more comfortable old age than an annuity will provide. And a nice legacy for the grandchildren, too.
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