Annuity calculator
An annuity converts a pension pot into a guaranteed income for life, with the amount set by an annuity rate that varies by provider, age and health. At an illustrative single life, level rate of 7.9%, a £100,000 pot buys about £7,900 a year for life. gov.uk's guidance on planning retirement income sets out the options for using a pot.
How does an annuity work?
An insurer takes the pension pot and, in return, pays a set income for the rest of the annuitant's life. The size of that income is the annuity rate, shown as a percentage of the pot. A 7.9% rate means a £100,000 pot pays £7,900 a year. The trade-off is certainty against flexibility: the income is guaranteed and never runs out, but access to the capital is given up. gov.uk's guidance on planning retirement income lists an annuity as one of the main ways to use a pension pot.
What would a £100,000 pot pay as an annuity?
A £100,000 pot at a single-life level rate of 7.9% buys an estimated £7,900 a year, or £658 a month, for life. Choosing joint life, so a partner keeps an income after death, brings the rate down to around 7.1%, giving a lower starting income. Choosing a rising annuity to protect against inflation starts lower still, near 5.4%, but the payments grow each year.
Should I choose a level or escalating annuity?
A level annuity looks generous at the start but loses purchasing power every year as prices climb. A rising annuity starts smaller yet defends the pensioner's standard of living over a long retirement. Someone in poorer health, expecting a shorter retirement, often finds the higher level income suits them, while a healthy person planning for thirty years may value the escalation more. This is a personal decision that depends on health, other income and attitude to inflation.
Common questions
What income will my pension buy as an annuity?
It depends on the annuity rate, which moves with interest rates and the buyer's age and health. On an illustrative 7.9% rate, a £100,000 pot buys about £7,900 a year for life. Rates in 2026 have been near their highest for well over a decade, so it is worth comparing the whole market.
How does an annuity work?
An insurer exchanges a pension pot for a guaranteed income paid for the rest of a person's life, at a rate fixed when the annuity starts. A 7.9% single-life level rate turns a £100,000 pot into about £7,900 a year. The income never runs out, but the capital cannot be accessed once bought.
What would a £100,000 pot pay as an annuity?
At an illustrative single-life level rate of 7.9%, a £100,000 pot gives an estimated £7,900 a year, or £658 a month. Adding joint life or an escalating rise lowers the starting rate to around 7.1% or 5.4% respectively, since each feature costs some starting income.
What is the difference between single and joint life?
A single-life annuity pays you until you die and then stops. A joint-life annuity keeps paying a share, often half, to your partner after you die. The protection costs income, so a joint-life rate is lower than a single-life one for the same pot.
Should I choose a level or escalating annuity?
A level annuity pays the same amount every year, so it starts higher but inflation erodes it. An escalating annuity rises each year, often by 3% or in line with prices, so it starts lower but holds its value. The right choice depends on how long you expect to live and how much you fear inflation.
Are these figures a quote?
No. The rates here are illustrative and editable, meant to show how the numbers move. A real quote depends on your exact age, health, postcode and the options you pick, and enhanced rates for health conditions can be considerably higher. Always compare live quotes before you buy.
Sources & Rate Verification
Rates verified against official statutory guidance on 6 September 2026.