Anyone retiring this week has a tough decision to make: do you buy your retirement annuity right now, or wait to see if the report of the National Pensions Initiative - not due until April - recommends any major changes to the annuity purchase system.

"Hold your fire," says independent financial adviser Owen Morton of Moneywise Financial Planning. "Nobody knows exactly what the Pensions Initiative will recommend, but the expectation is that they will address the issue of compulsory annuity purchase," he says.

Compulsory annuity purchase is the requirement by which you must lock in your pension fund at the going investment rate once you hit retirement age, despite what could be a very poor market performance at the time.

From this annuity, you will receive your annual pension, on either a fixed, or indexed return.

The hope is also that issues like partial annuity purchase will also be recommended by the report, which will allow retirees to only draw down a certain amount of their fund, leaving the rest of it to continue growing.

This option is particularly suitable to people who end up doing other work, even part-time when they retire and don't need a full pension.

New annuity products have been launched over the last year or two which have been anticipating many of the changes that are expected in the annuity system here.

The latest is the Irish Progressive "Retirement Options" pension product which provides a lump sum death benefit for a spouse, dependant or estate after the retiree dies.

Other pensions die with the retiree or after the spouse dies, regardless of how soon after retirement.

The options works this way: after the allowable tax-free lump sum has been taken out, (i.e. up to 25 per cent), the residual fund is used to purchase either a "retirement cashback bond" or "capital preserved annuity".

The former is a tax exempt approved pension out of which a small portion of the fund is used to buy the standalone bond which will then pay a lump sum on the pensioner's death. The balance buys the conventional annuity.

For example, if you retire at 60, and your pension fund is worth £300,000, you can take 25 per cent as a lump sum, i.e. £75,000.

This leaves £225,000 to buy a residual fund out of which a pension will be paid to the retiree and his spouse. When they die, the pension dies with them.

Under this new system the Cashback Bond will cost £37,180 and provide cover of £100,000. The balance buys a single life annuity which will provide a pension of £15,500 a year.

The capital preserved annuity option or more correctly options since there are two choices will either give you a pension for life as well as the full return of the purchase price of that annuity on death or a pension for life but this time the lump sum will equal the purchase price, less the total pension payments made to the pensioner to the date of death. Option two provides a higher annual pension.

Moneywise Financial Planning has just launched the Moneywise Annuity Bureau, a fee-based pension purchase service which analyses the different annuities (and purchase rates) on the market, including this latest one from Irish Progressive, Norwich Union's unique impaired life annuity (which pays a higher return to pensioners with serious health conditions) and Equitable Life's unique with-profits annuity.

A copy of the guide "Understanding Annuities" is available free from Moneywise Annuity Bureau at 31a Westland Square, Dublin 2. Telephone: 670 5938.