What is a pension annuity?
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.
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A guaranteed income for life or set number of years
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Peace of mind covering essential expenses
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Flexible with joint, inflation-linked, or fixed-term options
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Easy to manage with no ongoing investment decisions
Annuity rates are now at some of the highest levels we've seen in over 15 years [1]. That’s because interest rates have gone up and that means better income for you when you lock in a rate.
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.
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What are the benefits of an annuity?
An annuity provides a secure income for life, no matter how long you live.
Your annuity can be set to cover everyday bills and living costs, giving you confidence in retirement.
You can tailor an annuity to suit your needs, from protecting against inflation to providing for a partner.
Is an annuity right for you?
An annuity could be a good choice if you want the certainty of a guaranteed income for life, without the worry of market ups and downs. It’s especially valuable if you’d like to make sure your essential costs such as bills, food, and housing are always covered.
Annuities may also suit people who:
- Prefer the security of a fixed income over investment risk
- Want to provide for a spouse or partner with a joint-life option
- Value peace of mind knowing they won’t run out of money
- Have health or lifestyle conditions that could qualify them for an enhanced annuity (worth up to 30% more income)
But an annuity isn’t right for everyone. Once purchased, you can’t usually change it, and income may not keep pace with inflation unless you choose an inflation-linked option. That’s why speaking to an FCA-regulated adviser is so important, they can explain whether an annuity, drawdown, or a mix of both is the best fit for your retirement goals.
Things to consider
- Annuity rates vary between providers
Different providers offer different incomes, so it pays to shop around. - Once purchased, you usually can’t change it
Once set up, you usually can’t change or switch your annuity. - Inflation risk
A level annuity won’t rise with the cost of living unless you choose an inflation-linked option. - Less flexible than drawdown
Annuities provide security, but drawdown may offer more flexibility (with more risk).
Why expert advice on annuities matters
- Compare annuity rates across the UK market - providers don’t always offer their best rates upfront, and the difference between the highest and lowest can add up to thousands of pounds over your lifetime.
- Check if you qualify for an enhanced annuity – health conditions, lifestyle factors, or even medication could mean you’re entitled to up to 30% more income than a standard rate.
- Help you blend annuities and drawdown - many retirees choose a mix: an annuity for guaranteed essentials, and drawdown for flexibility and growth. An adviser can tailor the balance to your goals.
How it works?
It couldn't be simpler, start by completing our online form so we can get a better understanding of how we can help.
We will use the information that you provide us with to match you with the best pension adviser for you.
You’ll hear from your local adviser shortly to book your free consultation with no pressure to proceed.
Why use our service?
Making decisions about your pension is important, and getting the right advice can make all the difference. Our service connects you with trusted, FCA-regulated advisers who are ready to help you navigate your pension choices.
- Free and impartial - There’s no charge for using our service — we’ll match you with a qualified adviser at no cost to you.
- Quick and convenient - It takes less than a minute to be matched with an adviser who understands your needs.
- Advisers near you - Our nationwide network means you’ll be connected with someone local, so you can choose how and when to speak.
Our expert adviser network
All of the advisers we work with are FCA-authorised and regulated.
Frequently asked questions
An annuity is a financial product that converts your pension pot into a guaranteed income, usually paid for life.
They can be, especially if you value certainty and want to make sure your essential costs are always covered. An adviser can help you compare options and decide if it’s right for you.
Yes. In most cases, you can take up to 25% of your pension pot tax-free before using the rest to buy an annuity.
Yes and the difference can be significant. That’s why it’s important to shop around and get advice before committing.
Absolutely. Many people use an annuity for secure income and drawdown for flexibility, giving them the best of both worlds.
[1] According to research from Professional Pensions
[2] According to research conducted by Royal London and ILC