Money hacks Annuities are back in vogue - here's how to get best value

'The stability of a guaranteed income gives retirees peace of mind their money won't run out, even if they live past 100'

- Rupert Jones

Consider your options

Annuities aren't sexy, but they are definitely having a moment. Sales are on the up, and more people look likely to take one out after changes to inheritance tax on pensions announced in October's budget.

An annuity is a product that converts an individual's pension pot into a regular guaranteed income for the rest of their life, or for a fixed term. You pay a life insurance company a lump sum, and in exchange it guarantees you a regular payout.

For a long time, annuities were viewed as poor value, and demand plummeted after the "pension freedoms" introduced a decade ago meant people no longer had to take one out.

But the higher interest rates of recent years mean that people buying an annuity now get more bang for their buck. When interest rates rise, so do annuity rates.

"The stability of a guaranteed income gives retirees peace of mind that their money won't run out even if they live past 100," says Lorna Shah at Legal & General, a big annuity provider.

You can use pension savings to buy an annuity once you are aged 55 - rising to 57 from April 2028.

The income you get is dependent on things such as your age and your health at the time you buy it.

Shop around

There are lots of different types, and once you buy an annuity, you can't normally change your mind. So think carefully about which (if any) is right for you, and maybe take some advice.

Your existing pension provider is likely to contact you as you near retirement and offer to turn your pot into an annuity. But you don't have to take its offer - you are free to shop around and buy one from any provider, and you are likely to get a better deal by doing so.