Should I choose an ARF or an annuity?

If you’ve been saving for retirement, you will have built up a pension pot. Approved Retirement Funds (ARFs) and annuities are the two ways you can benefit from the money in this pot.

When you retire, you can select which of these best suits your needs; alternatively, you can choose a mix of both. To help you decide, here’s a brief outline of the two options:

An Approved Retirement Fund (ARF) lets you manage and invest the funds in your pension pot where and how you wish. This means you’ll experience the market’s ups and occasional downs. There’s also the possibility that your fund might eventually run dry. However, if you want to retain control and flexibility over your retirement savings, an ARF will give you both.  

An annuity will pay you a risk-free income for life or for a specified period. This gives you stability, you don’t face any market-related risks and you won’t have to make investment decisions in the future.

If you wish, you can split your retirement savings between an ARF and an annuity. Of course, doing this can reduce the amount that either option will pay you.

Choosing between an ARF and an annuity is an important decision. So it’s worth talking to an Ask Acorn financial advisor to learn about your options before you make any decisions.