Pension Annuity Calculator
Your Annuity Estimate
Tax-Free Lump Sum-
Amount to Annuitise-
Estimated Annual Income-
Estimated Monthly Income-
Annuity Rates by Age (per £100,000) 2025/26
| Age | Level Single | Level Joint | 3% Escalating |
|---|---|---|---|
| 55 | £5,200 | £4,600 | £3,400 |
| 60 | £5,800 | £5,100 | £3,900 |
| 65 | £6,500 | £5,700 | £4,500 |
| 70 | £7,400 | £6,500 | £5,300 |
| 75 | £8,600 | £7,500 | £6,300 |
Rates are indicative and based on average UK annuity provider quotes as of April 2026. Actual rates vary by provider, health status and postcode.
Key Pension Facts
Tax-Free Lump Sum
25%
Min Age
55 (57 from 2028)
Lifetime Allowance
Abolished
Lump Sum Limit
£268,275
State Pension
£11,502/yr
Personal Allowance
£12,570
How to Use This Calculator
1
Enter your pension pot value
The total value of your defined contribution pension fund.
2
Enter your age at purchase
Annuity rates increase with age because the provider expects to pay for fewer years.
3
Choose annuity type
Single life pays more but stops at your death. Joint life continues paying your spouse at a reduced rate.
4
Select escalation
Level annuities pay the most initially but lose value to inflation. Escalating annuities start lower but increase over time.
5
Review your income estimate
See your estimated annual and monthly income along with any tax-free lump sum.
Frequently Asked Questions
What is an annuity?
An annuity is an insurance product that converts your pension pot into a guaranteed income for life. You pay a lump sum to an annuity provider and they pay you a regular income until you die. Unlike drawdown, an annuity provides certainty of income.
Should I take the 25% tax-free lump sum?
Most people take the 25% tax-free lump sum (known as the Pension Commencement Lump Sum). This reduces the amount available to buy an annuity but provides a tax-free cash sum. The maximum tax-free lump sum is £268,275.
What is an enhanced annuity?
If you have health conditions (such as diabetes, heart disease, or if you smoke), you may qualify for an enhanced annuity that pays a higher rate. This is because the provider expects to pay for fewer years. Always declare health conditions when getting quotes.
Can I shop around for annuities?
Yes, and you absolutely should. You have the legal right to buy an annuity from any provider, not just your pension company. Shopping around (using the Open Market Option) can increase your income by 20% or more.
What about drawdown instead?
Pension drawdown (flexi-access drawdown) lets you keep your pension invested and withdraw income as needed. It offers more flexibility but carries investment risk. Many people use a combination of annuity and drawdown.
Is annuity income taxed?
Yes, annuity income is taxed as earned income. It is added to your other income and taxed at your marginal rate (0%, 20%, 40% or 45%). The personal allowance for 2025/26 is £12,570.
Official Sources & References
Data verified against official UK government sources. Last checked April 2026.