Enter your pension pot value, your age, and the year you plan to retire. Pension Puma estimates your guaranteed monthly and annual income using the latest published annuity rate, then shows how the top UK pension providers compare this month. And the best part: it's free! And what's more - we do not farm your personal details like other comparison sites do - happy days!
Fill in the form and hit CALCULATE MY ANNUITY INCOME to see your projected monthly and annual annuity payout.
Indicative single-life, level annuity rates for a healthy 65-year-old with a £100,000 pension pot. Click a column to sort. Rates move daily with gilt yields. Always confirm the live rate before buying.
| Rank | Provider | Indicative rate ▾ | Annual income / £100k |
|---|
Here is a summary of what a pension annuity actually is, the PROs, the CONs, and how it stacks up against the other main option at retirement — a Drawdown pension.
An annuity is a financial product you buy with some or all of your pension pot, usually as a single lump sum, in exchange for a guaranteed income paid at regular intervals for the rest of your life (or for a fixed term, depending on the product). The rate you're offered depends mainly on your age, health, the size of your pot, and prevailing gilt yields at the time you buy. Once purchased, most annuities cannot be reversed or cashed back in.
Both are ways of taking an income from your pension pot, the right choice depends on your priorities, other savings, and appetite for risk.
| Feature | Annuity | Drawdown |
|---|---|---|
| Income certainty | Guaranteed, for life or a fixed term | Not guaranteed — depends on investment performance and how much you withdraw |
| Investment risk | None — carried entirely by the provider | Carried by you — your pot stays invested and can fall as well as rise |
| Flexibility | Very limited once purchased; income and structure are usually fixed | High — vary, pause, or increase withdrawals as circumstances change |
| Inheritance | Usually ends on death, unless a guarantee period or joint-life option was added | Remaining pot can typically be passed on to beneficiaries |
| Longevity risk | Removed — income continues for as long as you live | Borne by you — a pot could run out if you live a long time or withdraw too much |
| Ongoing management | None needed once bought | Requires ongoing decisions and monitoring, often with professional advice |
Will I Pay Tax?
Income from an annuity is counted when working out how much Income Tax you’ll pay. The annuity provider will usually calculate this for you using your tax code, so tax will normally be taken off before you’re paid. Before buying an annuity, you usually have the option to take up to 25% of your pension as a tax-free lump sum – as long as the total amount of tax-free cash taken from all your pensions is within the lump sum allowance (LSA). The LSA is £268,275 for most people. You do not have to take the full 25% as a tax-free lump sum, or any at all. The more you take, the less you’ll have to give you an income later.
What About a Fixed-Term Annuity?
If you buy a fixed-term annuity, you can choose to use up your entire pension pot or get a payment when the annuity ends – called a maturity amount. You’ll agree how much your maturity amount will be when you take out the annuity. This often includes the option of taking a lower annuity income so you get a higher maturity lump sum. You can spend a maturity amount in any way you like or use it to give you more retirement income.
What About an Increasing Annuity?
You can choose for your annuity income to stay the same (Fixed / Level Annuity) or go up every year (Increasing / Escalating Annuity) either by a set rate such as 3% or 5% or in line with inflation. Fixed or Level annuities will usually give you a higher income at the start than Increasing annuities. But an increasing annuity will help make sure your retirement income will keep up with the cost of living.
What About an Inflation-Linked Annuity?
An inflation-linked annuity will rise each year in line with the retail price index. This protects your annuity against inflation, but it will start at a much lower rate. You'll need to consider your particular circumstances, such as your health, whether you want to receive an annuity income over a short or long term, and whether you want to leave an income to a spouse or partner after your death.
What About an Enhanced Annuity?
These pay out a higher income if your health or lifestyle may shorten your lifespan. For example, if you have an existing health condition or you smoke or are overweight. It's important to make sure that any provider you speak to asks you about your health so they can properly consider whether you're eligible for an impaired or enhanced annuity, as the income rates may be considerably better than other types of annuity.
What is the Open Market Option (OMO)?
The Open Market Option (OMO) is a regulation that allows someone approaching retirement in the United Kingdom to ‘shop around’ for a number of options to convert their pension pot into an annuity, rather than simply taking the default rate offered by their pension provider. Different providers offer different payout rates. Comparing quotes can secure a higher regular income. Don't forget - once you buy an annuity, you cannot change it, making it vital to find the best deal before you purchase!
Triple lock
A government commitment to increase state pensions by average growth in earnings, Consumer Price Index (CPI) inflation or 2.5% (whichever is highest).
Pension transfer
Moving pension savings from one pension provider to another. This should be carefully considered, as it may impact benefits and charges.
Tax-free lump sum (TFLS)
A part of a pension fund that can be withdrawn tax-free, usually up to 25% of the total value. The rest of the pension income is subject to the individual Lump Sum Allowance.
Annuity protection
Also known as value protection which is a feature you can add to your annuity. It allows you to protect all or part of the fund used to buy your annuity. If you die before having received the protected amount, your named beneficiary will receive the remaining amount as a lump sum payment.
Guarantee period
You can choose to guarantee your annuity payments for a set time, usually up to 30 years. If you die during this time, your income will continue to be paid to your named beneficiary until the end of this period.
Investment-linked annuity
An annuity where your pension fund is invested in the stock market. Your payments depend on how well your investments perform. You can choose to invest all or some of your pension funds.
Defined contribution pension
A pension where the final payout depends on contributions made and investment performance. Individual pension funds are built up, and you take on the risk of investment returns.
Defined benefit pension
A pension where the retirement income is based on things like salary and years of service. Retirees receive a set income from the pension.
State pension
A regular payment from the government, providing a steady income in retirement. Eligibility and amount depend on an individual's National Insurance contributions.
Drawdown
A method of taking income from a pension while keeping the remaining funds invested. It can offer more flexibility compared to an annuity but does come with risks.
Annual allowance
The largest amount you can pay into your pension each year before you have to pay tax. The current annual allowance is £60,000 per tax year.
Auto-enrolment
A government scheme that means employers have to automatically enrol eligible employees into a workplace pension. Both employer and employee contribute to the pension fund.
Pensions Ombudsman
The Pensions Ombudsman is an independent authority that investigates and resolves complaints and disputes about pensions. It provides potential help for individuals facing pension-related issues.