That meant the investment return aspect of an annuity was a small part of the equation. However, now that pensioners can expect to live for 20 years after picking up the gold watch the story is somewhat different. This issue has been partly addressed by companies offering with-profit annuities, where some of the fund is invested in equities and is able to grow. Not a mechanism for transferring wealth Much of the negative attitude to annuities relates to the fact that they do not allow wealth to be transferred from one generation to the next. But they were never intended to do that.
Annuities are simply a mechanism to ensure that pensioners get a regular income in retirement.
A pension fund is just what is says, something that enables you to live after you stop working. The problem is that no one, not even you, knows how long you will live and therefore how much money you will need. The first way is for each individual to build up their own pension pot during their working life and hope this will last them out. Elsewhere on the site we have talked about how much you need, but a ballpark figure is 300,000. That is a lot of money, and not everyone can achieve that.