This relies on several factors:

  1. When in your life you buy one

  2. How much you buy one with

  3. Your health

  4. The annuity company you choose

The AKG rating on our comparison indicates each company's financial strength, meaning the better the rating the smaller the chance the company will go bust.

What affects the annuity rate you get?

Each company has their own way of calculating the income they give you, but they usually look at:

  • Your age

  • Whether you smoke

  • If you have any medical conditions

The income you get will rely on your life expectancy and anything that shortens this, such as poor health or being a smoker could increase the amount you get.

Will you need to prove anything?

Yes, if you have told your annuity company that you have poor health you will need to complete a medical.

This is usually done over the phone but depending on your condition you may need to produce doctor's note to prove your illness.

When should you buy an annuity?

Most pension companies let you buy an annuity when you reach 55, but the longer you wait to buy an annuity the bigger your income could be.

Buying an annuity later in life usually means you get a better rate as your life expectancy gets closer.

Is an annuity the only option?

No, our comparison shows two options you could choose to turn your pension fund into a retirement income:

  • An annuity is an income for life that you buy with your pension fund, but you will not be able to make lump sum withdrawals.

  • A retirement income plan reinvests your pension fund. You choose the investment term and when it ends you can withdraw any remaining money.

Pension annuity FAQs

Q

When can I buy an annuity?

A

Most pension companies let you buy an annuity when you reach 55, but make sure to check the age requirement with each company to be sure.

Q

Can I withdraw from my annuity?

A

No, once you buy an annuity the only money you can take is the income you get from it. This is due to change in 2017 though, find out more here.

Q

Do I need to use a pension fund to buy an annuity?

A

Usually yes, but there are some annuities you can buy with cash instead. Speak to an independent financial adviser if you need annuity advice.

Q

What happens if my annuity company goes bust?

A

The Financial Services Compensation Scheme (FSCS) will cover 100% of the value of your annuity if your company goes bust.