Want some peace of mind that you won’t run out of money when you retire?

A guaranteed income for life, also known as an annuity, could be a good choice for you. Using your pension savings to buy a guaranteed income means you get a guaranteed amount of money every year for as long as you live.

You’ll normally be able to take 25% of your pension tax-free, and the rest can be used to buy a guaranteed income for life which will be subject to income tax.

The amount of income you get will depend on a number of things like:

  • Your age
  • The size of your pension pot
  • Your health and lifestyle
  • Whether or not you’ve chosen an option where the amount of income changes over time

You can find out a bit more about the factors that will affect your income amount from the Money Advice Service

Finger print A guaranteed income can be tailored to you

There’s a range of options you can add. Meaning you can tailor your guaranteed income to make sure it’s right for you. Here are some of the options:

  • Stay in line with rising prices

    By choosing a guaranteed income that moves in line with inflation you can ensure that your money stays consistent with the rising prices of goods, giving you a better chance of a comfortable retirement. Or you could choose a guaranteed income with a fixed increase, giving you certainty on how much it will increase by.

  • Get higher income for poor health

    If you smoke, have a particular lifestyle, are on medication or have a medical condition you could qualify for a higher guaranteed income (enhanced annuity).

  • Provide for your loved ones

    You could choose a guaranteed income that allows you to provide for your partner, dependent or other nominated beneficiary after you die. This normally gives you a lower level of income as it's designed to pay out for longer.

  • Guaranteed payments for a set period of time

    You could choose a guaranteed income that has a guarantee period. This means the guaranteed income or annuity will be paid until the end of the guarantee period, even if you die before then.

  • Lump sum pay out

    Depending on your choice of guaranteed income, a lump sum pay out could be paid when you die.

Not sure if a guaranteed income is right for you?

Your options at a glance

Option Guaranteed for life? Is my money invested and
does it have the potential to grow?
Can I access my money at any time? Can I pass on what’s left? More information
Take a flexible income No Yes Yes Yes
Take cash from your pension No Yes Yes Yes
Buy a guaranteed income (Annuity) Yes No No No*
Leave your pension for now No Yes Yes Yes

*Usually you can't pass on your guaranteed income for life, but you could add on options - for example, to pay a spouse's pension after you die, to keep paying the income for a guaranteed period, or to include value protection which provides a lump sum death benefit.

If you’re unsure about which option is right for you our retirement path finder can help. It asks you a few questions and can give you a snap shot of your options.

Remember to shop around

Remember that you don't have to buy your annuity from our panel. You can research and shop around the open market yourself. This could improve your retirement income as annuity options and rates may vary between providers. Visit the Money Advice Service website for a free and independent guide to shopping around for your annuity.

Want to get started?

Want an annuity?

Whether you already have a plan with us or not, you can give us a call to set up an annuity on 0345 279 8897

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Get free impartial guidance

Go to pensionwise.co.uk or call 0800 1383944 for free impartial guidance face to face or over the phone. You can also take a look at the Money Advice Service for more guidance.