An annuity is where you hand over your pension to an insurance company, who in return gives a fixed income as a pension for the remainder of your life. This money is gone when you die as you cannot usually pass it on. 

For example, you may buy a £100,000 annuity, where you give your £100,000 pension to the company who will give you £5,000 every year until you die, regardless of you living for just 5 years or another 30 years. 

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