Buying a pension annuity: how to compare quotes
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Quick answer: An annuity converts pension cash into guaranteed income for life. Compare quotes from multiple providers using the Open Market Option — rates vary by age, health, spouse benefits and whether income rises with inflation.
An annuity purchase is largely irreversible after the cooling-off period. Shopping the open market, declaring health conditions for enhanced rates, and choosing the right shape of income protect retirement income for decades.
Getting quotes
Annuity options
Escalation: level income pays most today; RPI or CPI-linked income starts lower but rises. Some policies cap annual increases.
Guarantee period: if you die within e.g. five or ten years, income continues to your estate for the guarantee period.
Capital protection and value protection return unused pot minus income paid — for a lower starting income.
Mixing with drawdown
Common questions
Can I change my mind after buying?
You have a 30-day cooling-off period. After that, annuity terms are fixed for life in almost all cases.
What if interest rates rise?
Annuity rates generally follow gilt yields. Timing the market is difficult — essential income needs may outweigh waiting.
Is annuity income taxed?
Yes — annuity income is taxed as earned income through PAYE, using your personal allowance first.