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Your Guide to Buying an Annuity

Buying an annuity is a big financial decision that you must get right.

Written by the Retirement Line Team

Why you should shop around when buying a pension annuity

When you decide to buy your annuity to secure regular income from your pension savings, it’s important that you shop around. 

Accepting the first offer of an annuity from your pension scheme could end up proving costly. Instead, you may be able to enjoy more income by looking at what’s available from other providers. There may be significant differences between the annuity rates and income levels that each provider offers you.

As the UK's largest pension annuity broker*, we have helped thousands of people when buying an annuity. Our Annuity Specialists can help you compare annuity rates and quotes from the UK’s leading annuity providers to help secure the best rate. They will also explain the different annuity types, and features such as death benefits and inflation-proofing your income and the implications these may have on your annuity income.

Then we make things simple by guiding you through the application and buying process. We even liaise with your pension scheme and chosen annuity provider on your behalf until your annuity is set up. 

This guide to buying an annuity will tell you more, and you can also call our team of Annuity Specialists today on 0800 652 1316 or request a call back. They’ll talk you through your options and help you choose the best annuity for your needs. You can also use our free annuity calculator to see how much income you could secure with an annuity.

Click here for your free, no-obligation annuity quote

On this page:

What is an annuity?

Buying a pension annuity is an option if you have money saved in a ‘defined contribution’  personal pension or company pension scheme. An annuity turns your savings into regular income for life with a lifetime annuity, or for a set term with a fixed term annuity

Once your annuity is in place, the income it pays you won’t be affected by interest rate changes or ups-and-downs of the stock market. That means your income won’t drop if interest rates or investment performance drop, but neither will you benefit from rising interest rates or stock markets.

Can I do anything before buying an annuity to maximise my income?

You can normally buy an annuity at any time after age 55, although you may wish to wait longer. If you are some time away from buying a pension annuity, you may be able to take steps to grow the size of your pension pot. This could increase the level of retirement income your annuity will generate.

For example, you may be able to put more money into your pension scheme, either from your income or from other savings/investments. As well as boosting your pension pot, this could also have tax benefits as you generally receive tax relief on your pension contributions. Please note that Retirement Line are not tax specialists and that you should check this option first with your accountant or independent financial adviser.

What happens as I approach eligibility to buy an annuity?

If you are in a type of pension scheme where you can use your savings to buy an annuity, the scheme will contact you to explain your options. 

They will typically send you what’s known as a ‘wake-up pack’. Some schemes will do this every few years until you do something with your pension pot. These packs remind you that you need to start thinking about your retirement income options. 

The wake-up pack will usually include information about buying an annuity. This may include details of a specific annuity that you could buy. 

But you don’t have to take the annuity option offered by your pension scheme. You are free to get quotes from other annuity providers, this is known as the 'Open Market Option'. Shopping around could secure you more retirement income than the annuity offered by your pension scheme. 

Before buying an annuity, you may also look at alternatives such as income drawdown. You can talk to a financial adviser about these alternatives, or call Pension Wise. This free government service helps people aged 50+ understand their retirement income options.

Who do I buy an annuity from?

Remember, you don’t have to buy your annuity from your existing pension provider. You can exercise your Open Market Option to shop around for better annuity rates, particularly if your health or lifestyle means that you are eligible for an enhanced annuity.

Unfortunately, many people simply sign up for the annuity offered by their pension scheme. That could end up costing you: the Financial Conduct Authority found in 2016 that ‘80% of people who purchased an annuity via their pension provider could have received a better deal from another provider’.

Three simple steps to buying a pension annuity

You can start to shop around leading annuity providers with a single phone call to Retirement Line. Here’s how we make choosing and buying an annuity straightforward:

Step one: Tell us about you and your pension savings 

Your personal Annuity Specialist will check your eligibility for an annuity. They will also see if you might qualify for more income with an enhanced annuity based on your medical history or lifestyle choices.

We’ll also look at the details of your pension scheme. This is vital because you may have valuable safeguarded benefits, such as a Guaranteed Annuity Rate (GAR) or Guaranteed Minimum Pension (GMP). These might be hidden in the small print and can provide much larger payments, but only if the annuity is purchased from the original insurer. You may also be required to take advice if you wanted to transfer your fund to another provider.

Some policies can also contain penalties, which you need to be aware of before reaching a decision. Our Annuity Specialists can help you identify whether your policy contains any additional benefits or penalties.

Step two: Information and quotes

Retirement Line provides free annuity quotes, without obligation, from the UK’s leading annuity providers. We can offer our customers access to preferential terms due to the volume of annuity business we introduce. You’ll be able to compare these quotes with the annuity income your pension provider is offering you. 

We’ll also explain your options to help you decide on the type of annuity you want. This can be a conventional annuity, enhanced annuity, or a fixed term annuity. Different types of annuities suit different people in different circumstances. Your Annuity Specialist will also explain optional features such as annuity death benefits and inflation-proofing your retirement income.

Step three: Apply and secure your annuity income

Once you are satisfied that you have weighed up all your annuity options and made the right choice, you can arrange your annuity. Retirement Line handles this stage for you, taking care of all the paperwork and keeping you informed every step of the way.

We’ll send you a pre-completed annuity application form to check and sign. Then we’ll liaise with your pension scheme and annuity provider until your annuity income is in place.

Are there fees involved in buying an annuity?

We provide information about annuities and provide quotes so that you can compare your options. This on what’s known as a ‘non-advised’ basis.

Our non-advised service is provided without obligation and at no direct cost to you. Instead, we receive commission from your annuity provider if you go ahead with buying your annuity. This commission is taken into account in the annuity income you are offered. Alternatively, you can also talk to a financial adviser, but there will likely be a fee for this.

Why buy your annuity through Retirement Line?

At Retirement Line, we offer an impartial annuity information and quotation service. You could also benefit from preferential annuity rates we secure as the UK’s number one annuity broker* and our relationships with the UK’s leading annuity providers. 

We even have a Best Quote Guarantee where we'll send you a £250 M&S gift voucher if you receive a better annuity quotation on a like-for-like basis directly from another broker or provider¹.

For a free, no-obligation annuity quote, try our free annuity calculator. If you’d prefer to speak with an Annuity Specialist directly, you can call us on 0800 652 1316 or email us at

Click here for your free, no-obligation annuity quote



¹ Terms & conditions apply

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