What is an annuity?
An annuity is an insurance contract converting a pension pot into a guaranteed income, usually for life. Once bought it generally cannot be reversed. The income depends on the size of the pot, your age, your health and the options chosen, such as a spouse's pension or inflation protection.
The options materially change the rate. A single life, level annuity pays the most and protects the least; adding a spouse's pension, a guarantee period or annual escalation reduces the starting income in exchange for durability.
Enhanced and impaired life annuities pay more where health or lifestyle shortens life expectancy. A surprising proportion of people qualify and never ask, because the question is never put to them.
The open market option lets you buy from any provider, not just the one holding your pot, and the difference between the best and worst rate is consistently material. An annuity is the only retirement decision that is genuinely irreversible, which is an argument for taking time over it — and often for not annuitising everything at once.