An Annuity Rate is the amount of regular retirement income you can buy from an annuity provider with your pension fund. Annuity rates vary a great deal, and can change rapidly in line with economic conditions.
As people have started to live longer, annuity rates have fallen sharply. If you want a survivor's pension, the rate will depend not just on your age, but your partner's too. Citizens' Advice provides information about choosing an annuity.
There are many online sites quoting the annuity rates provided by different providers for different types of annuity. The Money Advice Service provides some illustrations based on a pension pot of £10,000, from which 25% is taken as a tax free lump sum, leaving £7,500 to buy an annuity.
The suggested annual income amounts are:
- basic annuity £364, after 30 years still £364
- increasing annuity £254, after 30 years £533
- guaranteed for 10 years £356, after 30 years £356
- if you have bad health, £473, after 30 years £473.