What is an annuity?
You can use some or all of the money in your pension plan to buy an annuity. An annuity will provide you with a guaranteed regular income for the rest of your life so you'll have the peace of mind knowing that it won't run out before you die.
The amount of income you'll get depends on various factors, these include:
- Your age
- The amount of money in your pension pot
- Your health and lifestyle
- Any options you choose as part of your annuity (such as an income that increases over time)
When you reach 55 (57 from 6 April 2028) you can usually take 25% of your total pension pot tax-free then use the rest to buy a guaranteed income for life. If you prefer, you don't have to take the tax-free lump sum and can use your whole pension pot to buy an annuity instead. Keep in mind that the guaranteed income you get may be taxed.
Laws and tax rules may change in the future. Your own circumstances and where you live in the UK also have an impact on tax treatment.
Is an annuity right for me?
You can tailor your annuity to make sure your guaranteed income is right for you.
Depending on the options you choose on your annuity, this will reduce the amount of income payable. Remember, you won't be able to change your mind later.
The Standard Life Pension Annuity may be right for you if you:
- Want a regular, guaranteed lifetime income
- Would like the option of having your income increase each year, either in line with inflation or by a fixed rate
- Would like the option to provide a lump sum or a regular, guaranteed lifetime income for a dependant when you die
- Would like to avoid your retirement income being impacted by investment risk
- Are happy to accept that you can’t change or cash in your annuity once it’s been set up, even if your circumstances change
- Are happy to accept that the total income you receive over the life of your annuity may be less than the total amount that was used to buy it
- Live in the UK
The Standard Life Pension Annuity may not be right for you if you:
- Have less than one year to live
- Have less than £10,000 in pension savings
- Would like the freedom to make changes to your retirement income payments, such as taking additional lump sums
- Would like to keep your pension savings invested so you can potentially benefit from future investment growth
- Would like your dependant to benefit from any remaining savings in your pension pot when you die, without having to buy additional guarantees or protection
- Are happy to accept that your pension savings could run out before you die
- Have declared bankruptcy and the fund value of your pension plan has been earmarked to settle some or all of the outstanding debts
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Access to impartial guidance
We recommend you seek appropriate guidance or advice before you make any decisions. You can also get free impartial guidance over the phone or face to face from the age of 50 with Pension Wise a service from MoneyHelper. Go to moneyhelper.org.uk/pensionwise or call 0800 138 3944
If you want to use a financial adviser, you should always make sure they're authorised by the Financial Conduct Authority (FCA).
The government's MoneyHelper service has a useful guide to help you find a financial adviser.
Why choose Standard Life?
Get started with an annuity
Important information about pension annuities
It's important to shop around and compare providers as you might get a better retirement income.