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Written by Retirement Line
Page last updated: 12th December 2024
Getting your free annuity comparison is simple
If you would like help to compare annuities from the best annuity providers, Retirement Line is here to support you. As the UK's largest pension annuity broker*, we assist thousands of people each year with their annuity comparisons.
We can compare annuity rates and quotes from leading UK providers to help secure you the best rate and income, at no obligation to you. Our Annuity Specialists also provide information to help you decide which type of annuity best meets your needs.
To compare annuities and see how much retirement income you might receive, try our free annuity calculator. If you’d prefer to speak to one of our Annuity Specialists, simply call 0800 652 1316 or request a call back. They’ll be able to talk you through your pension annuity comparison and help you choose the best annuity for your needs.
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An annuity is one way to turn savings in a 'defined contribution' personal pension or workplace pension scheme into income. An annuity converts your pension pot into guaranteed income, either for life through a lifetime annuity or for a specified period with a fixed-term annuity.
Once your annuity is set up, the income you receive remains unaffected by fluctuations in interest rates or stock market performance. This ensures your income won’t fall if interest rates or investments perform poorly.
Retirement Line provides annuity quotes for a range of annuities from the UK’s leading annuity providers. We offer three main types of annuity that you can choose from:
This pays you a guaranteed annuity income for life. You can choose to take your income as a fixed amount for life, or for your payments to increase over time. They are also often referred to as a traditional annuity or a standard annuity. Read more about conventional lifetime annuities here
This pays you a higher guaranteed annuity income for life if you have a qualifying health or lifestyle condition. Hundreds of illnesses including diabetes and high cholesterol can secure you more income, as can a history of smoking or drinking. Read more about enhanced lifetime annuities here
This pays you a regular annuity income for a fixed period of time. It may be an option for those who don’t wish to commit to a lifetime annuity at the moment. Read more about fixed term annuities here
|
Feature |
Lifetime annuity |
Fixed-term annuity |
|
How long does income last? |
Guaranteed for life – you’ll receive payments for as long as you live. |
Paid for a set term of your choosing. |
|
Can income levels change? |
Income can be fixed, or set up to start lower but rise in line with inflation or a fixed rate. |
Income can be fixed, or set up to start lower but rise in line with inflation or a fixed rate. |
|
What happens after the term? |
N/A – payments continue for life. |
Payments stop at the end of the term. You can arrange to get some money back at the end to use as you wish, such as buying another annuity or moving your remaining fund into drawdown. |
|
Impact of changes in annuity rates |
Income level is locked in at the time of purchase – rate changes won’t affect your income payments. |
Income is locked in for the term - changes in annuity rates would affect income from an annuity you set up once the term ends. |
|
Flexibility |
A lifetime annuity cannot typically be changed once arranged. |
Offers more flexibility and the freedom to revisit all of your options at the end of the term. |
|
Enhanced rates available on grounds of health/lifestyle |
Yes, you may qualify for enhanced income based on issues with your health or lifestyle choices. |
No, fixed term annuities are not available on enhanced terms. |
|
Death benefits (lump sum or income for a beneficiary when you die) |
Death benefits are not included by default, but you can choose to add them to your annuity. |
Typically included by default. |
Click here for your free, no-obligation annuity quote
You can tailor these different types of annuities with a range of options to suit your needs. Some may mean you receive less income each month. But in return, they provide benefits such as income for your loved ones when you pass away.
Take a look at the annuity options that are available to you when you arrange an annuity. They include options for:
Taking a tax-free cash lump sum: You can typically take up to 25% of your ‘defined contribution’ pension pot as a tax-free lump sum. The rest can be used to buy an annuity, with income from the annuity subject to income tax. Read more about the tax-free lump sum rules here.
How often your annuity income is paid: When arranging an annuity, you can choose how frequently you receive your income. Payments can typically be made monthly, quarterly, biannually or annually, depending on your preference.
How long your annuity income is paid for: The duration of your annuity income depends on the type of annuity you choose. A lifetime annuity provides guaranteed income for the rest of your life, while a fixed-term annuity pays out for a set period, after which you can explore other options.
Who it is paid to on your death: You can arrange for your annuity to provide income to a spouse, partner or other beneficiary after your death. Options include joint-life annuities, which continue payments to your chosen person, or including a guarantee period to ensure your income is paid for a minimum number of years, even if you pass away in that time. Read more about annuity death benefits here.
Protecting your annuity income against inflation: To safeguard the value of your annuity income, you can choose an inflation-linked option. This ensures your income increases over time, helping to maintain your spending power as living costs rise. Your income would typically start with lower initial payments compared to a level annuity. Getting an annuity comparison is important to fully understand the income difference you can expect initially, and the long-term pros and cons of each option. Read more about annuity inflation protection here.
If you have saved at least £2,000 into certain types of pension scheme, you should be able to take your benefits from age 55 (age 57 from April 2028). You can use your pension savings in private pensions and some workplace pension schemes to buy an annuity, securing a guaranteed income unaffected by interest rates or market changes.
You don’t need to do anything at age 55, or even when you retire. You may decide to leave it until later as that will normally increase the level of regular income you’ll receive.
However, you would miss out on income in the deferred period. Our Annuity Specialists can provide comparisons of starting an annuity at different times to help you make your decision.
The annuity rate offered by your chosen annuity provider is one of the factors that determines how much income you receive. Annuity providers typically link the rate they offer to the yields of long-term government bonds/gilts. These yields are linked to the Bank of England base rate, and when yields rise, annuity rates are also likely to rise.
Your personal annuity rate will also depend on your age. You’ll generally get a larger annuity rate as you get older. Adverse health or lifestyle factors may also qualify you for a higher rate with an enhanced annuity. Our Annuity Specialists will be able to check this for you as part of the service.
As you approach the point where you can turn your pension savings into an annuity, your pension scheme may contact you to offer you an annuity plan. The income they would pay is based on their own annuity rate, or the rate from the annuity provider they have partnered with.
However, you may find a better rate and more income if you compare annuities from other providers in the market. Annuity rates and fees vary between providers, so shopping around will give you the best chance of securing a higher income.
This process of shopping around to compare annuities is known as exercising your Open Market Option – it’s your legal right to find a better deal for your retirement income. It’s something we specialise in here at Retirement Line, as we’ll compare annuity rates and the income you’ve been offered against quotes from leading providers.
If you have a health condition of lifestyle factor, you might also find that you qualify for an enhanced annuity. These offer more competitive rates – and therefore a higher income – to those who are eligible. The qualifying criteria to achieve enhanced terms include high blood pressure, diabetes, a history of smoking, obesity and many more.
Buying an annuity might be something you do just once in your lifetime, so it’s important to get the best deal through a pension annuity comparison. Make the wrong choice, and it could cost you thousands over the course of your annuity or lifetime.
This issue was raised by the Financial Conduct Authority in 2016. It reported that ‘80% of people who purchased an annuity via their pension provider could have received a better deal from another provider’.
More recently, in September 2024 a report from retirement specialists Just Group confirmed that the gap between the best and worst annuity rates is still an issue. They say a healthy 75-year old could get up to 20% more income by shopping around, and 13% more at age 65. The gap could be even higher for people who qualify for an enhanced annuity on grounds of poor health or certain lifestyle factors.
There’s a simple way to compare annuity rates without the hassle of contacting multiple companies. Make just one call to Retirement Line and we can explain everything to you and run a detailed annuity comparison on your behalf.
This service includes checking if you qualify for an enhanced annuity rate based on your health or lifestyle. As the UK's largest pension annuity broker*, we also offer you 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.
Remember, Retirement Line’s annuity comparison service is provided without obligation. If we arrange an annuity for you, we will be paid a commission from the provider which is taken into account when calculating their annuity rate.
For your added peace of mind, our Best Quote Guarantee earns 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.
If you are planning a pension annuity comparison then that’s good news – it’s your first step to achieving a bigger retirement income for your money. Before you get started, it’s really important to consider your priorities and understand your options to ensure you get the right product for you. Here are some helpful tips:
Understand your annuity options. Take time to understand the different types of annuities available: lifetime, fixed-term and enhanced annuities. Our Annuity Specialists can take you through your options.
Know your priorities. Consider what’s important to you, such as how often you want to receive payments, whether you want to include death benefits, and whether you want to protect your income against inflation.
Be honest about your health. Providers offer enhanced rates for lifetime annuities based on factors like smoking, health conditions and taking prescription medication. Be honest about your health and lifestyle to ensure you receive the most accurate quote.
Consider inflation. An annuity with level payments might start with higher income, but inflation can erode their value over time. Consider whether an inflation-linked annuity suits your long-term needs.
Look beyond the headline rate. Consider the optional features that can help you tailor your annuity to your needs. Guarantee periods, for instance, can protect your income for loved ones if you pass away soon after purchasing the annuity.
Seek specialist guidance. Buying an annuity is often a one-time decision with lasting implications. Asking for an annuity comparison on your behalf can save you time and gain you access to preferential rates.
Remember, take your time to compare your options. Your annuity choice is one of the biggest financial decisions you’ll make, so make sure it aligns with your needs and goals.
Use our online pension annuity comparison tool
For a free, no-obligation pension annuity comparison, try our free annuity calculator. It takes just a moment or two to complete, but will mean you’ll be able to compare annuities from leading providers in seconds.
If you’d prefer to speak with an Annuity Specialist directly, you can call us on 0800 652 1316 or email us at info@retirementline.co.uk. We’d be delighted to work hard on your behalf to compare annuity rates and secure you the best available retirement income.
Why do I need to compare different providers’ annuity rates?
Annuity rates can vary significantly between providers, which means the income you receive in retirement could differ substantially depending on your choice. When you compare annuity rates, you maximise your chances of securing the best deal for your circumstances, potentially increasing your retirement income by thousands over time.
Retirement Line simplifies this process by obtaining quotes from the UK's leading annuity providers, ensuring you have access to competitive rates.
Where else can I get information about my retirement income options?
For free, impartial guidance on all of your retirement income options, Pension Wise is an excellent resource. This government-backed service offers free appointments, either online or by phone, to help you understand your retirement income choices.
You can visit their website at Pension Wise to book a consultation, or read our guide to Pension Wise to understand more about what they do.
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Retirement Line Limited is Authorised and Regulated by the Financial Conduct Authority, FCA No. 726601. Retirement Line Limited is registered in England and Wales, registration No. 6976976. Registered Office: 52 Forder Way, Hampton, Peterborough, PE7 8JB
*Equifax Touchstone pension income and annuity sales figures 2018 to 2020. Matrix Financial Solutions Inc annuity sales figures 2021 to 2023.
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