What does the term 'locked-in' investment in annuities refer to?

The term 'locked-in' investment in annuities refers to funds that cannot be accessed until certain conditions are met. This characteristic is particularly relevant in the context of retirement savings and pension plans, where funds are meant to be preserved for the purpose of providing income during retirement.

Locked-in investments are typically governed by regulations that restrict access to ensure that the funds are used primarily for retirement income. This design is aimed at preventing individuals from depleting their retirement savings prematurely, thereby supporting long-term financial security.

In contrast, the other options do not accurately describe the nature of locked-in funds. For instance, the notion that these funds can be accessed at any time is fundamentally opposed to the locked-in concept, which is all about restricted access. Similarly, the idea that these funds are guaranteed to lose value does not hold true, as they may appreciate over time based on market conditions. Lastly, while some annuities may provide cash returns, the essence of locked-in investments does not guarantee immediate liquidity or cash payouts, which differentiates them from standard liquid investments.