When buying an annuity, you can usually take up to 25% tax-free and the remainder is used to provide you with a guaranteed regular taxable income for the rest of your life - no matter how long you live.
You can't usually pass on a lump sum to your loved ones when you die, but there are options for providing them with an income. These are called joint life and a guarantee period:
With both of these options, you need to select them when buying your annuity.
Our calculator will help you understand how the options could impact your retirement income. You can use it to understand what your pension pots can provide. It will also show you the buying power of your money by taking into account the effects of inflation.
Please read all of our assumptions to understand how we’ve worked out the amounts.
The results are not a recommendation and not financial advice.
This planner shows you how taking different amounts of money from your pot can impact how long your money might last. You can input different amounts and see the impact it has.
This calculator will provide an estimate of how much Income Tax you may pay, depending on how much money you take from your pension. You can input different amounts in the box that asks for your gross salary and see roughly how much tax you might have to pay.
This tool is to show you how much Emergency Tax you might have to pay on withdrawals from your pension pot.
No. You can use some or all of your pension to buy a guaranteed income for life. We would always recommend that you seek financial advice first.
Yes, unless you select a joint life or guarantee period when first buying the income for life.
No, usually the guaranteed income for life will not be passed on as a lump sum.
No, once you have decided to purchase a guaranteed income for life, you can’t change to another option. There is usually an initial cancellation period though.
No. Normally you have to be at least 55 to buy a guaranteed income for life. But you can buy it at any point after this age. Some providers do have a maximum age for taking an income for life.
This isn't always the case. It’s important to shop around for the best deal from a number of providers.
We know there’s a lot to consider when planning for retirement, and it can be tricky to know where to start. To help you understand all your retirement options, we recommend speaking to your adviser or getting guidance.
Find an independent financial adviser in your area to help you in your future pension planning.
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Pension Wise is a free and impartial guidance service offered by the Government. They can’t make recommendations or tell you how to invest your money, but will provide information on a range of available pension options.
hmrc.gov.uk to find out more information on tax rules and legislation which may affect you and your pension plans.