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Considering a pension annuity?
Annuity rates are now at some of the highest levels we've seen in over 15 years**. That’s because interest rates have gone up and that means better income for you when you lock in a rate.
An annuity turns your pension savings into a guaranteed income either until you die or a set number of years. It’s a popular option for people who want peace of mind and a steady income in retirement. It’s especially worth considering if you want to remove the risks of investing and you’d prefer a fixed income you can rely on.
An annuity is also a great option if you have health conditions as you might qualify for more income with an enhanced annuity.
It’s a great time to explore your options. But annuities are a long-term decision and once you’ve bought one, it can’t usually be changed. That’s why it’s so important to get the right advice now and make sure you're getting the best deal for your retirement with expert FCA-regulated advice.
How much does an annuity cost?
You don’t pay for an annuity like a product, instead you use some or all of your pension pot to buy one. The amount you use becomes a one off payment to the annuity provider, and in return, they pay you a guaranteed income for life or a set period.
For example: If you have a £100,000 pension pot, you might choose to:
- Take 25% tax-free (£25,000)
- Use the remaining £75,000 to buy an annuity
Your exact income will depend on:
- Your age and health
- The type of annuity you choose (e.g. single, joint, inflation-linked)
- Which provider you go with
- Current annuity rates
What are your pension income options?
- Lifetime Annuity
Offers you a guaranteed income for life. Your adviser will take you through your purchase options - including if you are looking for a Single Life or Joint Life.
- Fixed Term Annuity
A great option for bridging to your state pension. A fixed term annuity pays a guaranteed income for a set term (e.g. 5 or 10 years).
- Escalating Annuity
Protecting against inflation Starts lower, but increases by a set amount (e.g. 3% per year)
- Enhanced Annuity
A solid option if you have health or lifestyle risks. An enhanced annuity pays up to 30% more if you qualify (e.g. for high blood pressure, diabetes, or smoking history).
- Pension Drawdown
As an alternative to purchasing an annuity, you can choose to keep your pension invested and draw income as needed. The income isn’t guaranteed and value can go up or down, but this option gives you more control over how much to take and when.
It’s important to speak to a pension adviser who can look at your personal situation and recommend the best option for your retirement.
Why compare annuity rates?
Comparing annuity rates before you buy could boost your retirement income by thousands — helping you secure the best deal for your pension and make the most of your money.
- Maximise Your Income
Even a small difference in rates can mean thousands more over your retirement. - Access the Whole Market
Don’t limit yourself to your pension provider’s offer. We search top UK providers for you. - Tailored to You
Rates vary based on your age, health, and pension pot size — we find the best deal for your situation. - Free, No-Obligation Quotes
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*An enhanced annuity can secure you up to 30% more income according to Which?