Annuity Calculator UK 2025
Estimate your annuity income, compare level vs inflation-linked options, and calculate your break-even point.
Last updated: February 2026 | Indicative rates only - shop around for actual quotes
UK Annuity Income Estimator
Get an estimated annuity income based on your pot size, age, health, and options. For actual quotes, always shop around using the open market option.
UK Annuity Guide 2025: Everything You Need to Know
An annuity converts your pension pot into a guaranteed income for life. Once the near-universal choice for UK retirees, annuities fell out of favour after the 2015 pension freedoms but have enjoyed a significant resurgence following the interest rate rises of 2022-2023 that pushed annuity rates to multi-decade highs. This guide explains everything you need to know about UK annuities in 2025/26.
Current UK Annuity Rates 2025
Annuity rates are primarily driven by UK gilt yields (10-year government bond yields). When interest rates rise, annuity rates improve. The following are indicative market rates for a level, single life annuity with no guaranteed period and no health enhancement, per £100,000 pension pot:
| Age | Level Single Life | RPI-Linked Single | Joint Life 50% | Enhanced (est. +25%) |
|---|---|---|---|---|
| 60 | £5,600/yr | £3,640/yr | £5,000/yr | £7,000/yr |
| 65 | £6,750/yr | £4,390/yr | £6,050/yr | £8,440/yr |
| 70 | £8,150/yr | £5,300/yr | £7,250/yr | £10,190/yr |
| 75 | £10,200/yr | £6,630/yr | £9,050/yr | £12,750/yr |
These are indicative market rates as of early 2026. Actual rates vary by provider and change daily with gilt yields. Always obtain multiple quotes using the open market option.
What Is an Enhanced Annuity?
An enhanced (or impaired life) annuity offers a higher income to those with health conditions or lifestyle factors that statistically reduce life expectancy. The insurer pays more because they expect to make fewer payments. Enhanced annuities can pay 15-50% more than standard rates.
Qualifying conditions include:
Even mild conditions can qualify for enhanced rates. Always declare all health conditions honestly when seeking annuity quotes. Enhanced annuities are regulated by the FCA and providers include Just Retirement, Partnership, Canada Life, and Legal & General.
Level vs RPI-Linked Annuities: Which Is Right for You?
Level Annuity
- Fixed income that never changes
- Higher starting income
- Simple and predictable
- Inflation erodes purchasing power over time
- At 3% inflation, income halves in real terms after 24 years
- Good if you have other inflation protection (State Pension, DB pension)
RPI-Linked Annuity
- Income rises with Retail Prices Index each year
- 30-35% lower starting income
- Maintains purchasing power through retirement
- Break-even vs level typically 15-20 years
- Best for those expecting long retirement (25+ years)
- Higher cost to insurer = better value if you live long
The break-even calculation: For a £200,000 pot at age 65: Level pays £13,500/year. RPI-linked pays £8,780/year (3% inflation assumed). Real-terms break-even is around year 18-20. If you live past age 83-85, the RPI-linked annuity has paid more in total real-terms income. Average UK life expectancy at 65 is approximately 84 (male) / 87 (female).
Guaranteed Period: Protecting Against Early Death
A guaranteed period ensures your annuity pays for a minimum number of years even if you die sooner. Common options are 5-year and 10-year guarantees.
Example: £200,000 pot, age 65, level annuity. Without guarantee: £13,500/year, stops on death immediately. 10-year guarantee: approximately £13,200/year. If you die in year 3, 7 more years of payments (£92,400) are paid to your estate. The income reduction is small (around 2-3%) but provides significant peace of mind, particularly for those who are not in robust health.
Value protection (capital protection) guarantees return of the purchase price minus income paid as a lump sum on death. More expensive than a simple guarantee period but ensures your heirs always receive at least the original investment.
The Open Market Option: Never Accept Your Provider's Rate
You have the legal right to shop around for the best annuity rate from any UK provider - this is the open market option (OMO). Your current pension provider is almost never the best choice for an annuity. Research by the FCA has repeatedly shown that shopping around increases annuity income by 10-20% on average, which over a 20-year retirement adds up to tens of thousands of pounds.
Before purchasing an annuity, you are required to receive a Pension Wise guidance session (the Guidance Guarantee, for DC pensions). This free government service (45-60 minutes, in person or by phone) explains all your options. Book at pensionwise.gov.uk or call 0800 138 3944.
To compare annuity rates, use: MoneyHelper annuity comparison, Hargreaves Lansdown annuity search, Just Retirement comparison, Canada Life and Aviva direct quotes, and an independent financial adviser regulated by the FCA.
Pension Wise and the Guidance Guarantee
Since 2015, anyone approaching retirement with a defined contribution (DC) pension must be offered a free Pension Wise guidance appointment before accessing their pension flexibly. While not mandatory, it is strongly recommended. Pension Wise guidance covers: all pension access options (drawdown, annuity, lump sum), tax implications of each choice, understanding enhanced annuities, using the open market option, and avoiding pension scams.
Pension Wise is a government service delivered by MoneyHelper. It does not provide personalised financial advice (that requires an FCA-regulated adviser) but gives you the knowledge to make informed decisions and ask the right questions.
Money Purchase Annual Allowance (MPAA) After Annuity Purchase
Purchasing a standard lifetime annuity does not trigger the Money Purchase Annual Allowance (MPAA). You retain the full £60,000 annual allowance and can continue contributing to other DC pensions. However, taking any income from flexi-access drawdown (not an annuity) or an UFPLS triggers the £10,000 MPAA, severely limiting future pension contributions. This is an important distinction when planning your retirement strategy if you are still working part-time.
UK Annuity Providers 2025/26
The major UK annuity providers regulated by the FCA and Prudential Regulation Authority (PRA):
- Legal & General: UK's largest annuity provider. Strong on standard and enhanced annuities. Competitive rates consistently.
- Canada Life: Strong on enhanced annuities. Good for complex cases including health conditions and large pots.
- Aviva: Major provider with good digital tools. Competitive standard and joint life rates.
- Standard Life (Phoenix Group): Broad range. Often competitive for investment-linked annuities.
- Just Retirement (Just Group): Specialist in enhanced annuities. Often best rates for those with health conditions.
- Scottish Widows: Good for straightforward cases. Part of Lloyds Banking Group.
Rates change daily based on gilt yields. The best provider varies week to week. Always compare at least 4-5 quotes before purchasing.
Frequently Asked Questions
What is an annuity and how does it work in the UK?
An annuity converts your pension pot into a guaranteed income for life (or a fixed term). You pay a lump sum to an insurer who pays a regular income until death. Income is taxed as earnings. Post-2015 pension freedoms, annuities are no longer compulsory. Providers include Legal & General, Canada Life, Aviva, and Just Retirement.
What are current UK annuity rates in 2025?
Indicative rates per £100,000 pot (level single life): Age 60 ≈ £5,600/yr, Age 65 ≈ £6,750/yr, Age 70 ≈ £8,150/yr, Age 75 ≈ £10,200/yr. RPI-linked rates are typically 30-35% lower. Enhanced rates for health conditions can be 15-50% higher. Rates change daily with gilt yields - always get multiple quotes.
What is an enhanced annuity and who qualifies?
An enhanced annuity offers higher income to those with reduced life expectancy due to health conditions: diabetes, high blood pressure, heart disease, stroke history, cancer, COPD, obesity, smoking. Enhancement of 15-50% above standard rates. Always declare all conditions when getting quotes - even mild conditions can qualify.
What is the open market option for annuities?
The open market option is your legal right to shop around for the best annuity rate from any UK provider, not just your pension provider. Shopping around typically increases income by 10-20%. Use Pension Wise, MoneyHelper, and direct insurer quotes. A Pension Wise guidance appointment is required before accessing DC pensions.
What is the difference between level and RPI-linked annuities?
Level annuities pay fixed income (higher starting amount, erodes in real terms over time). RPI-linked annuities rise with inflation each year (30-35% lower start, but maintains purchasing power). Break-even is typically 18-20 years. For expected 25+ year retirements, RPI-linked often wins on total real-terms income.
What is a joint life annuity?
A joint life annuity continues paying income to your spouse or civil partner after you die, at 50% or 100% of the original income. Costs roughly 10-20% less starting income than single life. Essential if your partner has little independent income. Compare carefully against single life plus separate provision for your spouse.
What happens to my annuity when I die?
A standard single life annuity pays nothing to heirs on death. Protection options: guaranteed period (pays for 5-10 years regardless), value protection (returns purchase price minus payments made as a lump sum), joint life (continues to spouse). Unlike drawdown, annuities generally pass nothing to children - a key trade-off vs flexibility of drawdown.