UK Annuity Calculator

How an annuity works

An annuity is an insurance product: you hand over some or all of your pension pot in exchange for a guaranteed income for life (or, with a joint-life annuity, until the second person dies). Once bought, it can't normally be changed or cashed in — you're trading flexibility for certainty. The income you get depends on your pot size, your age when you buy (older buyers get a higher rate, because the insurer expects to pay for fewer years), your health and lifestyle, and the options you choose: single life or joint life, level or rising (escalating) income, and whether payments are guaranteed for a minimum period even if you die early.

Annuities are regulated financial products. Calcuris is a data and research site, not a financial adviser, broker or annuity provider — this tool estimates what published market rates would produce for a given pot, age and product type. It does not arrange, sell or quote a real annuity.

The annuity rates used here (as of 2 July 2026)

The table in the calculator shows the annual income a £100,000 pot would buy, by age and product type, taken from Hargreaves Lansdown's published best-buy rate table (2 July 2026) and cross-checked against Retirement Line's published rate table (2026-07-01) — the two independent sources were within about 1–2% of each other on every comparable line. Your estimate scales this benchmark proportionally to your own pot size.

These rates move. They're driven mainly by long-term gilt (UK government bond) yields, which change daily. Hargreaves Lansdown's own published history shows the age-65 single-life level rate moving from about £7,688 in January 2026 to £7,825 in June 2026 for the same £100,000 pot — a swing of roughly 1.8% in six months, and larger moves have happened over longer periods. We re-check both source tables every quarter and re-date the figures; if you're reading this more than a few months after the date shown, treat the numbers as a rough guide only and check a live source before acting.

The 25% tax-free lump sum and the Lump Sum Allowance

Most people can take up to 25% of their pension pot tax-free before buying an annuity, up to the Lump Sum Allowance of £268,275 (2026). Taking the lump sum reduces the pot left to buy the annuity, so it reduces the guaranteed income — there's no way around that trade-off. On a £100,000 pot at age 65, taking the full 25% (£25,000) tax-free leaves £75,000 to annuitise, for an income of about £5,952.00 a year instead of £7,936.00.

There's a separate, larger cap that matters for bigger pots: the Lump Sum and Death Benefit Allowance of £1,073,100 (2026), which limits the total tax-free lump sums and certain death benefits you can take across your lifetime. For example, on a £1,200,000 pot, a requested 25% lump sum of £300,000 is capped at the £268,275 Lump Sum Allowance — the calculator applies this cap automatically.

Level vs. escalating annuities — the breakeven point

A level annuity pays the same amount every year for life — it starts highest but loses purchasing power to inflation over time. An escalating annuity — rising by a fixed percentage (commonly 3% or 5%) or tracking RPI — starts noticeably lower but grows every year.

On a £100,000 pot at age 65, the benchmark single-life level rate pays £7,936.00 a year flat, while the single-life RPI-linked rate (5-year guarantee) starts at only £5,304.00 a year. Under an illustrative 3%-a-year growth assumption (not a forecast of actual RPI, which is volatile and unknown in advance), the rising annuity's annual payment first overtakes the level payment around year 14 (age 79), but the cumulative amount paid only catches up after about 27 years (age ~92) — beyond average UK life expectancy from 65 (roughly 19–21 further years, ONS). This mirrors standard guidance that level annuities usually pay more in total unless you live well beyond average life expectancy, or real inflation runs consistently hotter than the assumption you choose. Change the escalation percentage in the tool to see how sensitive this is — the breakeven moves a lot with the assumption.

Single life vs. joint life

A single-life annuity pays only you, for as long as you live, and stops when you die — it pays the most per pound of pot. A joint-life annuity continues paying a beneficiary (typically a spouse or partner) at an agreed percentage — commonly 50% or 100% — after you die, which costs a lower starting income. On the same £100,000 pot at 65, the benchmark joint-life-50% rate pays about £7,341.00 a year — roughly 7% less than single life — because the insurer expects to pay out for longer across two lives.

Enhanced annuities: health and lifestyle can raise your rate (not modelled here)

If you smoke, have a higher BMI, or have certain medical conditions, insurers may offer a materially higher rate — an "enhanced" or "impaired-life" annuity — because your life expectancy is assessed as shorter. Published data shows this can add several percent to the rate even for a single disclosed factor like smoking. This calculator deliberately does not ask for health, smoking status or postcode and does not model enhanced rates — that requires a real underwriting process with a broker or insurer, not a generic benchmark. If any of this applies to you, a whole-of-market annuity broker or MoneyHelper's Pension Wise service can point you to enhanced quotes that may pay noticeably more than the standard rates shown here.

Tax on annuity income

Annuity income is not tax-free (only the optional 25% lump sum taken before buying can be). Once payments start, the income is added to any other income you have that year — salary, other pensions, State Pension — and taxed through your tax code at your marginal rate, exactly like employment income (MoneyHelper). This tool shows the gross annuity income only and doesn't calculate your personal tax bill, since that depends on your full income picture, tax code and any allowances.