How Much Guaranteed Income Could Your Pension Buy?
An annuity turns your pension pot into a guaranteed income for life. Rates have moved significantly. Speak to an approved FCA-regulated specialist and find out what yours could pay.
- Free, no-obligation conversation
- Whole of market
- Get clear answers whether an annuity is right for you
- Live quote (This Months Rates)
Why An Annuity Is Worth Looking At Again
For over a decade annuity rates were poor and most people ignored them. That has changed. Higher interest rates have pushed annuity rates up substantially from their lows, and for anyone who wants certainty rather than investment risk, they are back on the table.
An annuity is a straightforward trade. You hand over some or all of your pension pot, and in return you receive a guaranteed income – usually for the rest of your life. It does not run out. It does not fall when markets fall.
What it will not do is grow, and in most cases you cannot change your mind once it is set up. That is exactly why it is worth having the conversation with someone regulated before you commit.
Things a specialist will check that most people miss
- Enhanced rates. If you smoke, are overweight, or have a medical condition, you may qualify for a materially higher income. Many people never declare it and never get offered it.
- Shopping around. You are not obliged to take the annuity your current pension provider offers. The open market can pay more.
- Shape. Single life or joint life, level or increasing, guarantee periods, value protection. These change the income figure significantly.
- Whether an annuity is right at all. Drawdown, a mix of both, or waiting may suit you better. A regulated adviser will tell you if it does.
Common Questions
What is an annuity?
An annuity is a product you buy with your pension savings that pays you a guaranteed income, normally for the rest of your life. You can usually take up to 25 per cent of your pot as tax-free cash first, and use the rest to buy the annuity.
How much income will I get?
It depends on your pot size, your age, your health, and the shape of annuity you choose. Two people with identical pots can be quoted very different incomes. That is why comparing properly matters.
Can I change my mind later?
Generally no. Most annuities cannot be reversed once the cooling-off period has passed. This is the main reason to take regulated advice before you buy rather than after.
Do I have to use my current pension provider?
No. You have an open market option, which means you can buy your annuity from any provider. Staying put out of convenience can cost you income for the rest of your life.
What does this cost me?
Nothing to enquire, and nothing to be introduced. The adviser will explain their own charges clearly before you agree to anything.
Who will contact me?
One FCA-regulated advice firm. We do not sell your details to multiple companies and you will not be passed around.
Important information
Pensions Advice UK is a trading name of GAP GNX Limited (Company No. 12013134). We are not authorised or regulated by the Financial Conduct Authority and we do not provide financial advice. We introduce enquiries to FCA-authorised and regulated advice firms. Nothing on this page is a personal recommendation.
The value of investments and the income from them can fall as well as rise and you may get back less than you invested. Annuity rates vary and are not guaranteed until a contract is in place. Tax treatment depends on individual circumstances and may change in future.
Free and impartial guidance on your pension options is available from Pension Wise, a government service from MoneyHelper, for anyone aged 50 or over. You can also seek independent regulated advice.
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