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Home Pensions & retirement Choosing income options Annuities

Annuities

Most annuities provide you with a lifelong, regular income that is guaranteed to last as long as you live. A quarter (25%) of your pension pot can usually be taken tax-free before you buy the annuity and any other payments will be taxed as earnings.

Annuities at a glance

Advantages

  • You get peace of mind because you’re guaranteed the income you have arranged
  • You can make plans for the future knowing how much income you’ll have
  • It’s possible to provide an income to your spouse or partner or leave any surplus to your loved ones
  • Even if you live past 100, you could still have an income
  • Your payments are protected by the Financial Services Compensation Scheme, so you’ll keep receiving them even if the company paying them runs into difficulties
  • You can combine the guaranteed income from an annuity with other types of retirement income          

Keep in mind

  • Annuity rates are low at the moment, so you may not get as much income as you expect right now
  • It can take many years for the payments from an annuity to add up to more than the money you had saved up in your pension pot
  • Providing an income to your spouse or partner or leaving any surplus to your loved ones may mean your income will be lower
  • Most annuities aren’t flexible. Once you’ve bought one, you have to stick with it – even if your situation changes
  • Unless you choose an increasing annuity, the income you receive will remain the same each year. With the effects of inflation, it will buy less as the years go by
  • Unless you choose an investment-linked annuity, you won’t benefit from economic or stock-market growth

The value of investments can go down as well as up, so you may get back less than you invest. This information is not a personal recommendation for any particular product, service or course of action.

Annuities guide

Find out more about the retirement income you can rely on for life.

Download the Annuities guide (PDF)
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Finding the right annuity

There are many different types of annuities, so it’s a good idea to shop around to find the best deal. You will also have to consider what type of annuity is best for you.

  • Do you want an income that will remain the same or increase each year?
  • Do you want an income just for you or one that will pay to your spouse or dependants if you pass away first?
  • Do you want to benefit from stock-market performance?
  • Do you want to buy an annuity for a shorter fixed term and then review your options?
  • Could you benefit from a higher (enhanced) annuity that takes into account any existing health issues you may have?

Shopping around

It is important that you shop around to find the best deal for you, as you would with any other purchase. Your pension provider may not offer the option you want or other providers may be able to offer you a better deal, so it is worth comparing what each provider can offer. 

Annuity Income Tool

​​​​​​Use our portal to help you choose your annuity options and shop around for the best guaranteed income for life.

Annuity Income Tool

Ready to chat?

Talk to someone about your retirement options in more detail

We can help

Close to retirement but unsure about the options and pitfalls ahead? We can offer guidance and advice to help you find the best solution for your retirement. Call us on 0800 368 6882, Monday to Friday, 9am - 5pm.

Fidelity’s retirement service

Pension Wise

The government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online or call on 0800 138 3944.

www.pensionwise.gov.uk

Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please refer to an authorised financial adviser.

Pension money cannot normally be withdrawn until age 55.

Fidelity Personal Investing does not give advice based on personal circumstances so you are responsible for deciding whether an investment is suitable for you. In doing so, please remember that past performance is not necessarily a guide to future performance, the performance of funds is not guaranteed and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. Before investing into a fund, please read the relevant key information document and ‘Doing Business with Fidelity’, a document that incorporates our Client Terms. If you are investing via the Fidelity SIPP and have not yet received a letter from us confirming you have moved to our new system, or are opening a new SIPP today you should read the Fidelity SIPP Key Features Document incorporating the Fidelity SIPP Terms and Conditions. Alternatively, if you open a new SIPP account after 31 January 2019 and are under 53 years old, or if you have already received a letter from us confirming you have been moved to our new system, you should read the Doing Business with Fidelity document incorporating our Client Terms. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.

© FIL Limited 2019