How much annuity income will I get?

The type of annuity you buy, plus any additional options you choose, will affect the income you will receive. For instance, you may choose a joint-life option, which will ensure that your partner can continue to benefit from your pension if you die before they do. This means your income will be lower than a single-life annuity. You could also choose a guaranteed payment period, which means that your annuity will be paid for a minimum number of years even if you die, but you'll receive a lower starting income than an annuity without one.

You can usually take up to 25% of your pension fund as tax-free cash. This will reduce the amount of income you'll receive when you buy your annuity, but can be used to reinvest in tax-efficient savings schemes.

Your income will also be affected by the annuity rates at the time you buy your annuity.

You can normally opt to be paid monthly, quarterly, half-yearly or yearly, and in advance or in arrears. Whatever the frequency, you'll get the highest income if you can be paid in arrears (at the end of the period).

Annuities are a guarantee of an income for life, therefore the rates they're based on change as life expectancy increases. The younger you are when you retire, the longer you are likely to have in retirement and the longer your annuity is likely to be paid to you. For this reason, you will generally get a lower income if you are 60 than if you are 70 when you buy your annuity.

Women tend to live longer than men, so they get a lower income than a man the same age when buying an annuity. This is because their income is expected to be paid for a longer period of time. On average, a man aged 65 is currently expected to live to 82, and a woman 85*.

*Source: Government Actuary's Department www.gad.gov.uk.

If you and/or your partner (if you choose a joint-life annuity) have an illness, condition or lifestyle habit that may shorten your life expectancy, such as smoking, you may qualify for an 'enhanced' (impaired life) annuity. This normally pays a higher income.