lifetime annuities

A lifetime annuity converts your money purchase pension into an income for the rest of your life, however long you live. Lifetime annuities are sold by life insurance companies and you can add different options and get different types depending on your needs and circumstances

How lifetime annuities pay out

The amount of income an annuity will pay will depend upon -

The amount in your pension fund after taking any tax-free cash. You must take any tax-free lump sum before your 77th birthday.
Whether your fund includes national insurance rebates because you contracted out of the additional State pension – you must buy a 50% spouse's pension with funds arising from national insurance rebates if you are married or have a civil partner.
Your health or lifestyle – some annuities pay you a higher-than-normal income if your health or lifestyle threatens to reduce your lifespan.
Your age – the older you are the higher the income you get will be. This is because, on average, an older person has fewer years left to live than a younger person.
But because people are living longer, annuity rates are adjusted from time to time to reflect this. So if you delay buying your annuity you could be taking a risk. And of course rates may rise and fall for various reasons.
Your sex – usually the starting income from the same size of pension fund is higher for a man than for a woman, of the same age. This is because, on average, the life expectancy of a man is less than a woman of the same age.
The benefits you choose, for example:
whether the annuity is for you, or for you and your spouse or partner ; or
if the annuity is level or escalating ; or
if it is guaranteed to pay out for a minimum number of years, even if you die during that time .