# Annuity or ARF?



## L&A (31 Jul 2009)

I am currently looking to invest in a PRSA with the Default Investment Strategy and am not sure whether to choose an annuity or an ARF?  What are the differences and main risks with each?
I am 33 and hoping to retire at 60.


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## DerKaiser (31 Jul 2009)

To be honest it shouldn't make much difference to you now. The real difference is as you approach retirement. 

If you are taking out an annuity at retirement you are effectively switching into guaranteed investments at retirement. The annuity default investment strategy reduces the risks associated with a sudden change in investments i.e. in the 5 to 10 years ahead of retirement your funds will gradually switch into guaranteed funds.

My view is that you should regularly assess the investment profile of your pension anyway, if you dn't think you'll do this then choosing a default strategy is the next best option


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## L&A (3 Aug 2009)

but doesn't the ARF offer better returns for your family if anything happened to you?  I am going for the DIS either way just not sure whether to go for annuity DIS or ARF DIS if that makes sense?


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## DerKaiser (3 Aug 2009)

L&A said:


> but doesn't the ARF offer better returns for your family if anything happened to you?  I am going for the DIS either way just not sure whether to go for annuity DIS or ARF DIS if that makes sense?



Just pick one of them.  There should be no material difference in strategies for at least 15 years.  You can change your mind at any point as the difference in investment strategy will probably only kick in about 10 years before retirement.


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