Buying an annuity

Buying an annuity is something you need to get right because it's a one-off decision. In other words, you can't swap annuity providers, once you've purchased a product. But as long as you're well-prepared, it can be relatively simple. And the good news is that there are a few simple steps you can take to ensure you get it right first time.

Stage 1 – Make sure you’re well informed

Gather as much information as you can about the pension or pensions you have. Get up-to-date statements, details on your proposed retirement dates and estimates of what your current providers would offer. With any quote you receive you will also get an 'Information prompt'. This will contain some important information that you should consider before deciding to go ahead - such as if you could receive a better income from another provider.

Stage 2 – Take good advice

Speak to a professional adviser about your financial options for the future. If you don’t have access to an adviser, or haven’t used one yet, start by looking at and These are impartial, independent websites that list advisers in and around your area.

Stage 3 – Talk to annuity providers

A comprehensive study by the Financial Conduct Authority in 2014 found that 60% of consumers were not switching providers when they bought an annuity. This was despite the fact that around 80% of these consumers could have got a better deal by shopping around on the open market!

But it's worth bearing in mind that this does also means that 20% of people could have made a good choice by sticking with the offer on the table. It's always worth shopping around for a better deal while you are talking to the company that's been looking after your money for many years, to find out if they have other annuity products you could consider.

Stage 4 – Choose your options

Having consulted a professional adviser, and gained an understanding of the products you’re being offered, it’s important to make careful decisions about your annuity options (things like making provisions for your spouse or partner or linking your income to inflation). We provide more information about choosing your annuity options here.

Stage 5 - Make a decision

Whether it’s your current provider or not, the company providing you with an annuity will take care of the administration involved: transferring funds out of your pension in exchange for a product that will pay you a lifetime of income.

Stage 6 – Receive your income

You’ll have some flexibility regarding the date on which you want to receive your income. It may make more sense to decide on a date that doesn't require you to change your bills and regular outgoings.

Can’t I buy an annuity on my own?

You can, of course, choose to buy an annuity without taking professional advice, and there are many helpful resources which you can use, such as the Money Advice Service, to help you understand how to make the right decision. It's also worth bearing in mind that the wrong decision could be costly, and that good advice could secure you a higher income for the rest of your life.

HUB Financial Solutions - part of the Just Group - offers an online annuity comparison service that could help you make sense of your options.

Go to the online annuity planner


Which types of annuity should I think about?

You can read more about the different types of annuity available, and how each one works.

What can I expect to get?

How much you receive as an income from an annuity will depend on many factors – from the size of your pension savings, to your health, lifestyle and the options that you select. To get an annuity that's right for you, you'll need to get a personalised quotation.

How long will it take?

Applying for an annuity can take a matter of minutes if you know what you want and you apply online, however it can take significantly longer to actually start receiving your income. It’s important to note that annuity quotes that you receive are only guaranteed for a limited time period, as the rates on which they are based are subject to a fair degree of change. In order to guarantee the rate that you were quoted, your pension funds must be with the annuity provider within a fixed period.

How quickly your annuity is set up will depend on how efficient your pension provider is, and some providers are much better than others. Approximately 2-3 weeks is not an unreasonable amount of time.

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