Use the Annuity Calculator UK to estimate the retirement income a pension pot could provide using an assumed or quoted annuity rate. Choose a tax-free cash percentage, income increase and payment frequency to explore the figures.
Enter your pension and annuity details
Income figures are gross before Income Tax. Actual annuity quotes depend on age, health, postcode, product features, market rates and provider.
What is an annuity?
A pension annuity exchanges some or all of a defined-contribution pension pot for a guaranteed income. The income can be paid for life or, for some products, for a fixed term. Options such as joint-life cover, guarantees, value protection and increasing income usually affect the starting rate.
This calculator does not predict a provider’s rate. Enter a rate from an actual quote or use an assumption only for planning.
How the calculation works
Annuity purchase amount = pension pot − tax-free cash
Starting annual income = purchase amount × annuity rate
If an annual increase is entered, the calculator compounds the starting income once each year. It displays the projected tenth-year income and the total nominal income over ten years. This projection ignores inflation and does not change the starting rate to price an escalating product.
Tax-free pension cash
You can usually take up to 25% of a pension as a tax-free lump sum. The standard overall maximum is £268,275, although a protected allowance can change the limit. The calculator uses £268,275 by default, and the cap field can be adjusted where a confirmed protected amount applies.
What affects an annuity rate?
- Your age when the annuity begins
- Health, medical history and lifestyle
- Single-life or joint-life income
- Level or increasing payments
- Guarantee period and value protection
- Provider pricing and market interest rates
- Payment timing and frequency
Worked example
With a £200,000 pension pot, 25% tax-free cash is £50,000. That leaves £150,000 to purchase an annuity. At a 6% quoted rate, estimated starting income is £9,000 a year, £750 a month or approximately £173.08 a week, before Income Tax.
Level versus increasing income
| Option | Typical starting income | Future payments |
|---|---|---|
| Level annuity | Usually higher | Stays unchanged, so purchasing power may fall |
| Increasing annuity | Usually lower | Rises by a fixed percentage or inflation measure |
The calculator’s increase field is a projection tool. Provider quotes for increasing annuities will normally use a different starting annuity rate from level products.
Tax on annuity income
Annuity income is generally taxable pension income. The actual tax depends on total income and tax code, so this calculator reports gross income rather than an estimated net amount.
Official guidance
Related UK calculators
Pension annuity calculator UK: estimate your retirement income
Use this pension annuity calculator to estimate the gross annual and monthly income from a defined-contribution pension pot. Enter the amount in your pension, choose how much eligible tax-free cash to take and enter an annuity rate from a provider quote or an illustrative assumption. The calculator multiplies the amount used to purchase the annuity by that rate. It does not search providers, offer an annuity or guarantee that a particular rate is available.
Annuity payout calculator: £100,000, £200,000 and £300,000 examples
For a simple illustration, if you use the whole of a £100,000 pension pot to buy an annuity at an assumed 6% rate, the starting gross income is £6,000 a year, or £500 a month. A £200,000 purchase amount at the same illustrative rate produces £12,000 a year; £300,000 produces £18,000. Actual quoted rates can differ with age, health and the features selected. Taking tax-free cash first reduces the amount available to purchase the annuity, so do not confuse the original pot with the annuity purchase amount.
Fixed-term annuity calculator versus lifetime annuity
A lifetime annuity is designed to pay income for the rest of your life, subject to the contract terms. A fixed-term annuity instead pays for a specified number of years and may provide a maturity amount at the end, depending on the product. These are different products with different pricing. This calculator does not price a fixed-term annuity or calculate a maturity value. Its ten-year income projection is an illustration of payments, not a ten-year fixed-term annuity quote.
How much annuity income could I get per month?
Monthly gross income is estimated by dividing the starting annual annuity income by 12. For example, £9,000 gross a year is £750 a month before Income Tax. A provider’s actual payment frequency, payment timing and contract terms can affect what is paid. If you are comparing monthly income with living costs, remember that this tool does not calculate your tax code or net take-home pension.
Level, escalating, joint-life and enhanced annuities
A level annuity usually starts with a higher payment but does not rise with inflation. An escalating annuity may increase by a fixed percentage or in line with an index, normally in exchange for a lower starting income. A joint-life annuity can continue paying a surviving partner according to the selected terms. Some people with qualifying health or lifestyle factors may be offered an enhanced annuity. Get separate like-for-like provider quotes: the calculator’s annual increase field does not automatically adjust the starting rate to reflect these product options.
Annuity or pension drawdown: which retirement option?
An annuity can provide predictable retirement income, while pension drawdown leaves funds invested and offers flexible withdrawals with investment and longevity risks. Some people combine approaches to cover essential spending and retain flexibility. Compare tax treatment, inflation protection, death benefits and whether the choice can be reversed before deciding. You can also use our Pension Pot Calculator UK to explore pension savings before retirement. For impartial information, consult MoneyHelper’s annuity guidance.
Is this a government annuity calculator?
No. This is an independent estimation tool, not a GOV.UK service, government annuity quotation or regulated financial recommendation. For UK pension tax information use GOV.UK’s pension tax guidance. Annuity rates and product terms change, so compare current quotations from providers before making an irreversible purchase.
Frequently asked questions
Does this calculator provide a guaranteed annuity quote?
No. It calculates income from the rate you enter. Only an authorised provider can provide an actual quote.
Can I take 25% tax-free cash before buying an annuity?
You can usually take up to 25%, subject to the applicable lump-sum allowance and any protections.
Is annuity income taxable?
Annuity income is generally taxable pension income, although the tax due depends on your total income and tax code.
What is a joint-life annuity?
It can continue paying an agreed proportion of income to a spouse, partner or dependant after the annuitant dies.
Can annuity income increase each year?
Yes. Some annuities increase by a fixed percentage or an inflation measure, normally in exchange for a lower starting income.
Important: An annuity purchase can be irreversible. Compare regulated quotes and consider professional guidance before making a decision.