if someone reaches retirement age, usually they will purchase a pension annuity. Annuities used for fund pension into a regular income that will be paid for the rest of their life. There are several types of annuity policies available, one of them is annuity profit.
Usually annuity funds are invested to provide a guaranteed income. The success or investment funds accounted for income annuities. If the investment performs as well or better than expected then the annuity income will be higher than a conventional annuity. But if the investment does not achieve the required level then the income can be reduced and may be lower than a standard annuity.
The decision of this policy is significant, because in many cases can not be changed later. When taking an Anticipated Bonus Rate (ABR) between 0% and 5% should be chosen. If the declared bonus annuity provider is higher than the ABR is selected then the annuity income will increase, if it is lower then the annuity income will decrease. With profits annuities are inherently more risky than a standard annuity policy and so they are not suitable and people will choose the other annuity policy.