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Guaranteed income for life

A lifelong, regular income (also known as an annuity) provides you with a guarantee that the income will last as long as you live. There are also short-term annuities available. A quarter (25%) of your pension pot can usually be taken tax-free and any other payments will be taxed as earned income.

Guaranteed income at a glance

Advantages

You get peace of mind because you’re guaranteed the income you’ve arranged.

You can make plans for the future knowing how much income you’ll have.

It’s possible to provide an income to your spouse or partner or leave any surplus to your loved ones.

Even if you live past 100, you could still have an income.

Your payments are protected by the Financial Services Compensation Scheme, so you’ll keep receiving them even if the company paying them runs into difficulties.

You can combine guaranteed income with other types of retirement income.

Disadvantages

Annuity rates are low at the moment, so you may not get as much income as you expect right now.

It can take many years for the payments from an annuity to add up to more than the pot of money you had saved up in your pension pot.

Providing an income to your spouse or partner or leaving any surplus to your loved ones may mean your income will be lower.

Most annuities aren’t flexible. Once you’ve bought one, you have to stick with it – even if your situation changes.

Unless you choose an increasing income the amount you receive will remain the same each year. With the effects of inflation, it will buy less as the years go by.

Unless you choose an investment-linked income, you won’t benefit from economic or stock-market growth.

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Finding the right guaranteed income

As there are many different types, it’s a good idea to shop around for the best deal. You’ll also have to consider what type is best for you.

  • Do you want an income that will remain the same or increase each year?
  • Do you want an income just for you or one that will go to your spouse or dependants if you pass away first?
  • Do you want to benefit from stock-market performance?
  • Do you want to buy an income for a shorter fixed term and then review your options?
  • You could benefit from a higher income that takes into account any existing health issues you may have.

Budget for retirement

Use the budgeting tool to input your known expenditure and compare it against your expected retirement income to see how much you can afford over and above everyday spending.

Retirement budgeting calculator

Get a guaranteed income quote

Provide basic information about your current situation to get a quote for a guaranteed income (annuity).

Get a quote now

Pension Wise

Pension Wise is a service that offers free, impartial guidance to help you understand your options at retirement. Call them on 0800 138 3944 or visit them online by clicking the link below:

Pension Wise

The value of investments can go down as well as up, so you may get back less than you invest. Tax treatment and eligibility to invest in a pension depend on personal circumstances. All tax rules may change in future. Pension money cannot normally be withdrawn until age 55.

This information is not a personal recommendation for any particular product, service or course of action. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please refer to an authorised financial adviser.

The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age.

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This information is not a personal recommendation for any particular investment, you are responsible for deciding whether an investment is suitable for you. In doing so, please remember that past performance is not a guide to future performance, the performance of funds is not guaranteed and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.

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