Answers · UK 2025/26

How much annuity income would a £150,000 pension buy in the UK?

Around £10,500-£11,250 a year before tax at age 65 for a single, level lifetime annuity in 2026/27, based on typical rates of about 7%-7.5%. Adding inflation protection or a spouse's pension cuts the starting income, often to £6,750-£8,250. Rates vary by provider and health.

Last updated: 10 July 2026Last reviewed: 10 July 2026How we verify

Full answer

Annuity income depends on your age, health, the options you choose and prevailing rates, so treat any figure as an estimate. For 2026/27, a healthy 65-year-old buying a single-life, level (non-increasing) lifetime annuity with £150,000 might get roughly £10,500-£11,250 a year before tax, equal to an annuity rate near 7%-7.5%. Worked example: you have a £150,000 pension pot. You first take 25% (£37,500) as tax-free cash, leaving £112,500 to annuitise. At a 7.2% rate that buys about £8,100 a year for life, taxed as income. If you instead annuitise the full £150,000 you might get about £10,800 a year, but you give up the tax-free cash. Choosing RPI-linked increases or a 50% spouse's pension typically lowers the starting income by 30%-40%, so the same pot might start at only £6,750-£7,500. Combined with the full new State Pension of around £12,548 a year, an £8,100 annuity would take total income to around £20,648, meaning a chunk of the annuity is taxed at the 20% basic rate after the £12,570 Personal Allowance is used up by the State Pension and part of the annuity. Enhanced annuities pay more for smokers or those with qualifying medical conditions. Use the pension calculator to compare drawdown against annuity outcomes for your pot.