An annuity, or pension annuity, is a regular income paid in exchange for a lump sum, usually the result of years of investing in an approved, tax-free pension scheme.

Most people will buy one with their pension pot in retirement. It is the conventional way of converting this into income. There are others, such as 'drawdown', but advisers usually recommend that only those with larger incomes go down this route. If you've got a chunky pension pot to play with, speak to an adviser to find the right option for you.

All in all, annuities are a way of managing a pension so that they have many long-term benefits in to retirement.

Find out more about pension annuity quotes.