With an Annuity, when you reach retirement you receive a regular income for the rest of your life, whereas an ARF allows you to remain in the investment market.

Annuities may be more suited for people who wish to avoid potential risks such as stock market volatility, and would prefer a guaranteed income in their retirement. An ARF gives you more control over how your retirement fund is managed. An ARF allows you to remain invested in the market with the ability to control your investment and take a flexible income in retirement. One of the key differences between annuities and ARFs is what happens if the policyholder dies. Annuities usually cease when the person passes away whereas ARFs generally pass to the deceased's estate.

There are a number of choices you need to make when purchasing an annuity: A Single Life Annuity is payable for the rest of your life only. With a Joint Life Annuity, a percentage of your pension is payable to your spouse after you die. If you choose to include a Guaranteed Period, your pension will be payable for a guaranteed period, even if you die during that time. A Level Annuity means payment of the Annuity remains the same throughout your life and an Escalating Annuity means payment of the Annuity increases at a fixed rate each year.

No one starts out knowing exactly what they'll need for their retirement years or what taxes and charges they will incur. With so many different plans and options available we all need some help making the decision that's right for us. Thankfully, you're not alone. From pension calculators to financial advisors, there's plenty of help available.