Getting the right annuity quote can mean the difference between a peaceful retirement and a life of constant bill battles. With pension annuity rates up in 2025 because of high interest rates and stronger gilt yields, now is a great time to review your retirement options and make sure you’re getting the most out of your pension savings.
While an annuity will provide guaranteed income for life, getting the best isn’t just about finding the highest annual income. It’s about understanding the different factors that affect pricing, knowing how to disclose lifestyle information and not making the costly mistake of accepting the first offer.
This guide will show you how to compare quotes effectively, which features affect your guaranteed income and how to make an informed decision for your future.
The Basics
Annuity Quotes tells you how much guaranteed income for life you’ll get in exchange for your pension pot. The amount is usually expressed per £1,000 of your pension fund, so you can estimate your future income.
For example, a healthy 65-year-old with a £100,000 pension pot might get annuity income of £7,000 to £7,425 a year, paid monthly during their retirement. These figures can change daily due to market fluctuations, economic uncertainty and personal circumstances.
Once you’ve accepted your quote, your income is locked in for life, making it easier to budget in retirement. For many people, this guaranteed income is better than the uncertainty of investing.
What Affects Your Annuity Quote
Age
Age is the biggest factor for the best annuity rates. The older you are when you buy an annuity, the higher your annuity income will be. This is because insurers expect to pay out money for a shorter period.
Health and Lifestyle
If you have certain medical conditions or lifestyle risks, you may be eligible for an enhanced pension annuity, which can pay 8%–20% more than standard options.
Health conditions such as
- Heart disease
- Diabetes
- High blood pressure
- Respiratory illnesses. Even mild conditions or regular medications can increase your income. Lifestyle factors such as smoking, alcohol consumption and even your postcode also affect annuity rates. Disclose this information fully and you’ll get a bigger quote.
Type of Annuity
Your choice of pension annuity type affects your quote:
- Single-life annuities pay more than joint-life annuities but don’t pay to a partner after you die.
- A level annuity pays the same amount every year, and an escalating annuity rises with inflation or by a fixed percentage annually.
- Guarantee periods ensure payments continue if you die early, but reduce the starting income.
Market Conditions
Annuity rates are linked to gilt yields and interest rates. With the economy improving in 2025, the latest annuity rates are higher than they’ve been for a while. However, annuity rates still change with the financial markets and may change in the future.
The Open Market Option (OMO): Your Big Advantage
Don’t assume your current pension provider gives you the best quotes. Under the Open Market Option, you’re free to shop around, and you should.
Different providers offer better annuity rates for different health or lifestyle profiles. Some specialise in enhanced annuities, others in fixed-term or escalating options. By using the OMO you can add thousands of pounds to your retirement income for free.
How to Compare Annuity Quotes
Use a Pension Annuity Calculator
Tools like a pension annuity calculator or annuity calculator allow you to estimate how much income you’ll get. Enter the same details for each platform to compare fairly.
Get Multiple Quotes
Contact at least 3 to 5 providers and ask for quotes using the same data. Include:
- Your age
- Lifestyle and health information
- Type of annuity (e.g., joint-life, escalating)
- Desired guarantee periods. While a higher starting annual income may seem attractive, consider the long-term value. Will the annuity keep up with inflation? Will your spouse have income if you die?
Check Provider Reputation
Read reviews, customer service and financial stability. You’re trusting this company to support you for the rest of your life, so reliability matters.
Enhanced Annuities: A Missed Opportunity for Many
Thousands of retirees miss out on higher annuity income just because they don’t disclose health conditions.
If you’ve ever:
- Smoked
- Been treated for a health condition
- Taken daily medication
- Lived in areas with lower life expectancy
You could be eligible for an enhanced annuity. This may involve filling out a medical questionnaire or attending a short medical exam, but the outcome is often worth it.
Timing Your Annuity Purchase
While trying to time the market can be risky, watching trends helps. In 2025, rising interest rates and stronger gilt yields have pushed annuity rates up.
Some retirees choose:
- Convert some of your pension pot now
- Leave the rest invested or in drawdown
- Buy again later if rates improve
This staged approach can give you flexibility and some annuity rate averaging and help you manage risk in uncertain times.
Don’t Make Annuity Mistakes
- Don’t accept the first quote: shop around using your OMO.
- Don’t hide your health: You could miss out on an enhanced annuity.
- Don’t go it alone: Get advice from a qualified financial adviser like Pension Potential for advice tailored to your individual circumstances.
You can also get free guidance through Pension Wise, the government’s free, independent service.
Make the Most of Your Retirement Income
Annuities can be a solid base of guaranteed income, but they don’t have to be your only solution. Many retirees combine annuities with drawdown to have flexibility and some income for life.
Think about:
- Taking a tax-free lump sum upfront
- Converting some of your pension pot to annuity
- Leaving the rest invested
- Using an annuity calculator or adviser to work out how long pension funds will last
By doing so you’ll have a retirement plan that balances security, flexibility and potential growth.
Ready to Get Yours?
If you’re looking at an annuity in 2025 now’s a good time to do so. But timing isn’t everything; preparation is key.
Start by:
- Reviewing your full pension pot
- Listing any health or lifestyle information
- Using an annuity calculator to get an estimate
- Speaking to a qualified financial adviser at Pension Potential for a personalised quote and to compare your options
With the right information and support, you can buy an annuity with confidence and get income for life. Contact Pension Potential today to learn more.
