Annuity

A lifetime annuity is a type of insurance policy that pays you a regular income for the rest of your life, in exchange for a lump sum. You can use all or part of your pension to buy an annuity.

When buying an annuity, you can choose whether the level of payment will stay the same, rise with inflation, or drop off later. If you like, you can also buy an annuity that pays your spouse an income after you die. These options must be chosen at the start.

The amount you receive from an annuity depends on your age, the size of your pension fund, and in some cases, your state of health. Once you buy an annuity, you’ll no longer have any say over how your pension is invested – but you will have the security of knowing your income will continue for the rest of your life.

Learn about the differences between annuities and drawdown

View all Jargon Buster terms

Popular terms

Alternative Investment Market (AIM)

The junior marketplace of the London Stock Exchange, acting as a way for small and medium-sized growth companies to access investors. There are weaker regulatory requirements for companies that want to list on the AIM compared to the Main Market, which can mean less protection for investors.

AJ Bell offers dealing within the AIM market via our investment platform.

Aquis Stock Exchange

An alternative junior marketplace to the Alternative Investment Market (AIM), offering a place for small and typically less mature companies to trade their shares. This is separate to and not owned by the London Stock Exchange.

Companies listed on the Aquis Stock Exchange tend to be at a very early stage of development with low levels of liquidity and little or no trading history, making them harder to buy or sell – and therefore a riskier investment.

AJ Bell offers dealing within the Aquis Stock Exchange via our investment platform.

Bond

A type of investment in which you lend money to a company or government. In return you get interest payments and repayment of the money you lent at the end of a specific term. The interest rate and term are set at the start of the investment.

Investing in bonds is generally considered safer than shares. But there are still risks, primarily default risk (i.e. the company or government becoming insolvent), inflation risk, and the risk that interest rates rise over time.

A bond issued by the UK government is also known as a gilt. You can buy bonds directly, as well as invest in funds that hold bonds.

See our bond offering Read more about bonds