The state pension is also unconnected to annuities.
But, for many of those who save into a defined contribution pension, there was an effective requirement to buy an annuity or face a hefty penalty.
The latest estimate is that 420,000 annuities are sold every year. As more and more people are enrolled automatically into a workplace pension, these annuities were expected to become even more common.
But in the 2014 Budget, the chancellor said he planned to scrap the requirement for those with defined contribution pensions to buy an annuity. Instead they will get free advice to decide what is best for them with regards to their pension pot.
This could mean people taking a big chunk of their savings pot to spend early in the retirement, although they will have to pay income tax on that.
