When you purchase an annuity pension, you have the comfort of a secure income for the remainder of your life. When you buy an ARF, there is no guaranteed income and the length of time that your fund will be available depends on the withdrawals you make, and the investment growth achieved by your fund.
For example, if a high level of withdrawals were made relative to the growth achieved, there is a risk that your fund could run out before death – and the longer you live, the greater the chances of this happening. You should also note that, in order to achieve good returns, it is likely that an ARF will invest at least partly in assets such as shares, bonds and property. The value of these assets may fall as well as rise, particularly in the short term.