# Buying a pension annuity: how to compare quotes

> Pensions & retirement · Last updated 4 July 2026

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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.

## Who should skip this

Skip this page if you need a personal recommendation or a live quote. This is general UK information — confirm today's figures with the official source linked below.

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.

## Key facts

- Open Market Option: you can buy an annuity from any provider, not just your pension company
- Enhanced annuities pay more if health conditions or lifestyle reduce life expectancy
- Joint-life annuities pay a survivor after you die — lower starting income than single-life
- Level annuities pay more initially than inflation-linked annuities that rise each year

## Getting quotes

Use an annuity broker or comparison service regulated by the FCA. Provide pot size, date of birth, postcode and whether you want single or joint life.

Declare all health conditions and smoking history — enhanced rates can be 20%–40% higher for qualifying conditions.

## 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

You do not have to annuitise the whole pot. Many retirees buy an annuity for essential spending and keep drawdown for flexibility.

Compare drawdown vs annuity guide and book Pension Wise before deciding.

## Frequently asked 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.

## Primary source

https://www.gov.uk/tax-on-your-private-pension/what-you-can-do-with-your-private-pension-pot

## Related

- [Drawdown vs annuity](https://moneyguide.org.uk/pensions/drawdown-vs-annuity/)
- [Drawdown income guide](https://moneyguide.org.uk/pensions/pension-drawdown-income-guide/)
- [Pension Wise explained](https://moneyguide.org.uk/pensions/pension-wise-explained/)
- [Annuity calculator](https://moneyguide.org.uk/tools/annuity-income-estimator/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.