Annuity providers and shopping around

When you retire, a pension pot built up in a defined contribution scheme can be exchanged for a guaranteed income. An annuity is a form of investment where a person pays a lump sum, usually to a pension company, in return for a guaranteed income, either for life or for a fixed number of years¹. You buy it from an insurance company, and crucially, you do not have to buy it from the company that holds your pension: official guidance states that you do not have to buy your annuity from your pension provider and can shop around before choosing one².

The difference between quotes can be substantial. Research by Just Group found a 70-year-old with a £50,000 pension could receive £4,063 a year from the highest quote, but only £3,560 a year from the least competitive quote³. For people aged 75 and over, figures reported in September 2026 show an average income of around £10,103 a year from a £133,000 pot⁴. How much you get depends on the value of the savings you exchange, your health, and the rate the annuity provider offers⁵.

This page explains what annuity providers offer, why rates and options differ between them, how to compare quotes, what typical incomes look like, the rise in the minimum purchase age from 55 to 57 in April 2028, and where to get free guidance first. The companion page on annuities explained covers how the product itself works.

What an annuity provider offers you

An annuity provider, normally a life insurance company, takes a lump sum from your pension pot and pays you a regular income in return. Stakeholder pension rules describe the arrangement in the same terms: when the pension can be paid, "you can use the fund you have built up to buy an annuity. This is a regular income, payable for life, which you can buy" from a life insurance company⁹. Personal pensions more broadly are available from banks, building societies and life insurance companies¹⁰.

The income you receive is determined by three things: the value of the savings you want to exchange, your health, and the rate the annuity provider offers⁵. Two people with identical pots can therefore be offered very different incomes, both by the same provider and by different providers, because each insurer sets its own rates and weighs health and lifestyle information in its own way.

What the provider offers is certainty rather than growth. After you swap your savings for an annuity, "this money is no longer invested and so will no longer have the opportunity to grow"⁵. In exchange, the income is guaranteed: it is payable for life (or the fixed term you chose) and does not depend on investment performance. That trade-off, security in return for giving up the pot, is the core of what an annuity provider sells.

Providers also offer a menu of options that shape the income: whether it rises each year, whether it continues to a partner after death, and whether it is guaranteed for a minimum period. Each option you add reduces the starting income, which is covered in the next section.

Rates and options differ between providers

Annuity rates are set by each insurer individually, and they differ for the same pot, age and health. There is no single market rate, which is precisely why shopping around matters. The options attached to the annuity differ too, and each one changes the income on offer.

The main options work like this:

• Level or increasing income. A level annuity pays the same amount every year. You have the option to increase payments each year in line with inflation, but this can be expensive⁵. A fixed escalation, for example 3% a year, is also common.
• Single life or joint life. A single-life annuity stops when you die. A joint-life annuity continues paying some or all of the income to a partner.
• Guarantee period. The income can be guaranteed for a set period, for example five years, so payments continue to your estate if you die soon after buying.
• Enhanced or impaired life terms. These pay out a higher income if your health or lifestyle may shorten your lifespan, and are relevant to people with existing health conditions, smokers or people who are overweight¹¹.

Not every provider offers every combination. Under the pension flexibility rules, "schemes do not have to offer all these options and some may choose not to"¹², and the same is true of insurers pricing annuities: each sets its own menu and its own rates.

The market itself has changed shape. Evidence to Parliament noted that "the number of annuity providers has halved in the two years since pension freedom"¹³, meaning fewer insurers compete for each purchase, but the remaining ones still price differently. The FCA's thematic review work found that people with medical conditions or lifestyle factors that may shorten life expectancy are often unaware of the additional income available from an enhanced annuity⁶, so the differences between providers are not always visible to buyers unless they ask.

Shopping around: your pension firm's offer is only one quote

The quote your pension provider gives you is one offer among many, not the market price. The right to buy elsewhere is long-standing and is often called the open market option: "you don't have to buy your annuity from your pension provider; you can shop around to find the deal that's right for you"¹¹.

Age UK's guidance captures the practical approach: "It's a good idea to start by checking what your pension provider is offering, because they may still offer a higher payment"¹¹. Your own provider is not automatically the lowest quote, and occasionally it is the highest, but you cannot know that without comparing it against the rest of the market.

The evidence on how much shopping around is worth is stark. The FCA found that "for those people purchasing enhanced annuities... 91% could get a better deal by shopping around"⁶. Even for standard annuities, the gap between the highest and lowest quotes runs to hundreds of pounds a year for the same pot, as the Just Group figures in the key facts box show³.

There is no shortcut through a comparison site in the way there is for insurance or energy. Official guidance on personal pensions states: "There are no comparison sites for personal pensions, so you'll either need to: manually search and compare your options" or pay a financial adviser¹⁴. Annuity comparison services do exist, but be aware of how they are paid: brokers and comparison services "get paid commission by the insurance provider for selling their products"¹⁵. Commission does not make a quote wrong, but it is a reason to check more than one channel and to understand whether the service you are using shows the whole market or only the insurers that pay it.

How to compare annuity quotes

Comparing quotes only works if the quotes are built the same way. A higher figure that includes a five-year guarantee and a spouse's pension is not a better deal than a lower single-life level quote; it is a different product. The process is:

1. Check your own provider's quote first. It may still offer a higher payment, and it gives you a baseline¹¹.
2. Decide the options you want before you ask for quotes: level or rising income, single or joint life, guarantee period, payment frequency.
3. Share your health and lifestyle details. Conditions, smoking and weight can qualify you for enhanced terms, and many people who could qualify do not realise it⁶.
4. Ask for quotes from several insurers using the open market option, either directly or through a broker².
5. Compare like with like. Every quote must have the same options attached; otherwise the headline figures are meaningless.
6. Take your time before deciding. Once bought, an annuity usually cannot be undone⁸.

Two practical points on the quotes themselves. First, quotes are usually valid for a limited period and rates move, so gather them close together. Second, if you use a broker or annuity service, ask whether it covers the whole market and how it is paid, since commission comes from the insurance provider¹⁵. Free guidance on the process, though not on which product to pick, is available before you buy and is covered later on this page.

Typical annuity income for people in their seventies

The figures below are illustrations from independent sources at their dates, not guarantees of what any individual will get. Your income depends on your pot, your age, your health and the options you choose.

The pattern in the figures is consistent: income rises with age, because the insurer expects to pay it for fewer years, and it falls sharply when options are added. A 65-year-old who gives up a level income of around £7,800 a year for one rising by 3% each year starts at around £5,700 instead¹⁶.

The rising-income trade-off is worth spelling out. A 65-year-old with an annuity that increases by 3% a year would have to wait until age 76 to get an income in excess of £7,800 a year, according to Which?'s May 2025 analysis¹⁶; a separate reading of the same figures puts the catch-up age at 85, and the two accounts disagree¹⁶. What is not disputed is the direction: escalation costs income now in exchange for protection against inflation later, and the break-even is many years away.

The gap between the highest and lowest quotes is the clearest lesson in the table. For a 70-year-old with £50,000, the difference between the highest and least competitive quotes was over £500 a year³. Over a long retirement, that gap compounds, and it is exactly what shopping around exists to close.

Minimum age to buy an annuity: rising from 55 to 57

The age at which you can use pension savings to buy an annuity is set by law, not by providers. Since April 2010, "the minimum age when you can take your workplace or personal pension increased from 50 to 55 for most people"¹⁰. The change was phased in over the preceding years, with schemes required to apply the new minimum of 55 by April 2010 at the latest¹⁷.

That age is now rising again: the normal minimum pension age is "set to rise to 57 from 6 April 2028"⁷. From that date, you will generally need to be 57 or over to buy an annuity with pension money, unless you have a protected pension age.

Whether the change affects someone who is already 55 or 56 depends on exactly when they reached 55:

• Turned 55 before 6 April 2026: "You're not affected by the rule change: the earliest you can access your private pension is 55."⁷
• Turning 55 between 6 April 2026 and 5 April 2028: "You'll be able to access your pension once you turn 55, but your pension age could jump to 57 in April 2028, depending on" your circumstances⁷.
• Protected pension age: some scheme members have a protected earlier age and may not be affected by the rise.

If you are in this window and planning to buy an annuity, the timing of the change is a hard deadline: a purchase completed before 6 April 2028 at age 55 or 56 is made under the current rules, and one made after is not possible until 57 unless a protected age applies. The page on when you can access your pension covers the wider rules.

Where to get free guidance before you buy

Because an annuity is usually irreversible, what you do before buying matters more than with almost any other financial product. Free, impartial guidance is available and is worth using first.

The main sources of free help are:

• MoneyHelper, which offers "free, impartial money and pension guidance, backed by government"¹⁹. Guidance is a broad term covering general information and signposting about pensions, which does not include a recommendation of a specific product²⁰.
• Pension Wise, which provides free guidance on your pension options⁵.
• Citizens Advice, which alongside MoneyHelper and Pension Wise provides impartial free guidance²¹.

Guidance is not the same as advice: these services will explain your options and how the market works, but will not tell you which annuity or provider to choose. For a recommendation you need a regulated financial adviser, who charges for the service. The distinction matters when money is at stake, and official advice is to "always get free, independent help before you pay a commercial service"²².

Be careful about unofficial sources. Guidance on spotting risky financial advice notes that social media influencers and unregulated contacts are a growing route for poor pension decisions, and free guidance from the established services is the safer starting point²¹. The page on Pension Wise explains what the appointment covers and how to book one.

Once bought: what can and cannot change

An annuity purchase is normally final. Citizens Advice guidance states: "You can't usually change your mind once you've bought an annuity."⁸ Which? makes the same point twice over: "Once you've arranged an annuity, you can't alter your level of income or switch to another provider"⁵, and "once you've bought an annuity you can't reverse the process"³.

The consequences follow from that finality:

• The income level, the options and the provider are fixed for life.
• The money exchanged is no longer invested and no longer has the opportunity to grow⁵.
• There is no cooling-off period in the usual sense, so the time for comparison is before purchase, not after.

One narrow exception exists on the pension side, not the annuity side: "In some cases, it's also possible to transfer to a new pension provider after you've started to draw retirement benefits"²³. That applies to remaining pension savings, not to an annuity already bought, and the abandoned plan to let people sell existing annuities, the secondary annuity market, never took off as hoped.

If something goes wrong with the way an annuity was sold, for example misleading information about options or about shopping around, you can complain to the provider and then to the Financial Ombudsman Service, which handles complaints about personal pensions and annuities²⁴. A 2022 report by the Work and Pensions Committee noted the persistent gap between the share of people who want an income for life in retirement, around 60%, and the roughly 20% who buy annuities, and pointed to the role of guidance in closing it²⁵. Free help before you buy remains the cheapest protection available.