What is a pension annuity?
A pension annuity works like a wage after you retire. You use your pension pot to buy it, and it pays you a regular guaranteed income for life.
Because it's guaranteed for life, you can make plans for retirement, knowing you'll always have this income, with no fear of the pot running dry. You can choose to protect your income from rising costs with escalating annuities. This will mean a lower initial income, while a level annuity will continue to pay the same amount.
We’ll also pay you more if you have certain health conditions or lifestyle factors that might shorten your life expectancy.
Different annuity providers offer different rates and choices. Shopping around can help you find the annuity that suits you best or pays you the highest income. Once you set up your annuity, you can't make changes to it, or cash it in.
Types of annuity
Pension annuity
This pays you a guaranteed income for life. You can choose to keep the amount the same or go up each year with inflation.
Fixed term annuity
The Guaranteed Fixed Term Income Plan pays you a guaranteed income for a set period of time (3-25 years). You can choose to receive a regular income now, a lump sum at the end or both options. Any income taken now will reduce the lump sum.
Life annuity
The Immediate Life Annuity pays you a guaranteed income for life using your savings instead of your pension.
Immediate needs annuity
A Lifetime Care plan pays monthly income to cover your care costs later in life.
Pension annuities explained
Watch our video to find out what an annuity is, and if it could be right for you in retirement.
Important documents
Before deciding whether to buy an annuity, make sure you’re up to speed with how it works and the options available by reading our Pension Annuity Key Features (PDF 220KB) document and Shopping Around Guide (PDF 66KB).
The benefits of a pension annuity
Get paid your way
Get paid your way You choose how we pay your income. You can fix it for life, increase it by a set amount each year, or increase your payments in line with the Retail Price Index. It’s your call.
Up to 25% of your pension tax-free
You can take up to 25% of your pension as tax-free cash before you buy your annuity. Taking tax free cash will mean a lower level of income. Tax rules can change and will depend on your personal circumstances.
No surprise fees
We include all fees when we work out your income so you won’t face any hidden charges.
How can I leave money for my loved ones?
If you intend to leave money for the people you care about, we offer a few options with our pension annuity.
These options provide added benefits and flexibility but will mean you'll receive a lower income from the start.
How to get started
Chat with our experts
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Get a quote
After you speak with our annuity expert, we’ll work out your guaranteed income using the details you’ve given. We’ll pay you this amount for the rest of your life. You can decide if it’s the right amount for you. If it fits your retirement goals, you can personalise and buy your annuity.
Pension Wise
Pension Wise from MoneyHelper is a service backed by the government. They offer free appointments to give impartial guidance to over 50s. They can explain the options to take money from your defined contribution pension pots.
Learn about our pension annuity
We have a wide range of simple guides that can answer your questions and help you get to grips with our pension annuity.
Things to consider
Annuity vs drawdown – two ways to take your pension money
When approaching retirement one of your main decisions will be how to take money from your pension. Explore the differences between drawdown and an annuity here.
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Things to consider
Level vs escalating annuity
Level annuities pay a higher initial income, but escalating annuities can protect the purchasing power of your income against inflation.
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Retirement boost
An overview of annuity rates
Annuities give you a guaranteed income for the rest of your life. But exactly how much could you get?
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Things to consider
How does annuity value protection work?
Annuity value protection allows you to add death benefits when you go to purchase your annuity.
Pension annuity FAQs
Am I eligible for a pension annuity?
What happens to an annuity when you die?
How is an annuity taxed?
Will my annuity change with inflation?
Can I transfer or sell an annuity?
What happens if I change my mind about buying an annuity?
Aviva Life & Pensions UK Limited. Registered in England and Wales No. 3253947. Registered office: Aviva, Wellington Row, York, YO90 1WR. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number: 185896.