Annuity

If you buy an annuity (guaranteed income for life) with your whole plan, this plan will be closed.

You can still pay into other pensions, or open a new plan, if you want to, though there are some limits to how much you can pay in.

If you take taxable income from a pension something called the Money Purchase Annual Allowance kicks in. After this, you can normally pay in a maximum of £10,000 a year.

There are some exceptions – for example, if you’ve only taken money from small pots (less than £10,000).

No, you normally can’t make any changes to your annuity once you’ve bought it. This means it’s important to consider all of the options before making a decision.

Remember, you don’t have to decide now. You can take a flexible income (drawdown) first, then buy an annuity later on.

Most providers have a maximum age for buying an annuity. With Standard Life, it’s 85.

When you reach 55 (57 from 6 April 2028) you can usually take 25% of your total pension pot across all pension plans as one, or multiple, tax free lump sums. You can then use the rest to buy an annuity (guaranteed income for life).

Tax will be deducted from your annuity payments automatically before they reach you. Tax rules and legislation may change and your own individual circumstances, including where you live in the UK, will have an impact on your tax treatment.

When buying a guaranteed income, you’ll be able to choose from various options for supporting your loved ones after you die. This may include a dependant's income – a regular income to a loved one – or a value protection lump sum. These are sometimes called ‘death benefits’.

This needs to be set up when you buy your annuity – you can’t add it later.

Generally no – but there are some exceptions.

If you're in serious ill health you may be able to access your pension before age 55. You can find more information on the HMRC website

You may also be able to take your pension early if you have a ‘protected pension age’. This is rare but may apply if, for example, you are a professional sportsperson. The rules vary between pension plans and providers, so check carefully.

Please call us on 0800 634 7477 so we can discuss all of your options.

Call charges will vary.

If you’re entitled to receive state benefits like Universal Credit or Pension Credit, you could lose your entitlement or be able to claim back less if you start accessing your pension savings. This is because your pension savings will count as a form of income or could be treated as ‘capital’. So do check if you could be impacted by this.

This can change depending on whether you’re over or under Pension Credit age. You can find out more on this from Citizens Advice.

If you're under age 55 and have a terminal illness with a life expectancy of less than 12 months, you may be able to access your pension early and you may pay less tax.

Please call us on 0800 634 7477 so we can discuss all of your options.

Call charges will vary.

Some pension plans have 'protected tax free cash'. This means you may get more than the normal 25% tax free.

Please call us on 0800 634 7477 if you'd like to take money from a pension with protected tax free cash.

Call charges will vary.

You may have a short cancellation period when you originally buy an annuity. This usually ends when you receive your first payment.