Pension Annuity

Q: What is the difference between an annuity and a pension?

'Pension' could be used to refer either to the amount that you have saved in your pension pot through private or workplace pensions, or to the state pension, which is paid by the Government. A pension annuity is a product that you can buy with your pension pot, which guarantees to pay you an income for the rest of your life.

Q: Can I sell or transfer an annuity?

If you apply for a Pension Annuity, you have 30 days from the date you receive our confirmation that your annuity has started to change your mind. If you do not take this opportunity to cancel, your annuity will continue for the rest of your life.

Q: What is an enhanced annuity?

An enhanced annuity is an increased income that you could get, if you have any medical conditions or lifestyle risks. You'll need to answer some medical and lifestyle questions to see if this applies to you. You can learn more in our enhanced annuities article .

Q: What happens to an annuity when you die?

There are options you can choose when buying an annuity that guarantees some money goes to your loved ones when you die. See the features section for more details.

Q: How many types of annuity are there?

There are lots of different types of annuity to choose from. And some have benefit options available too. You can learn more in our ‘ Types of annuity ’ article. We only sell lifetime and enhanced annuities.

What is a Pension Annuity?

A pension annuity is a product that converts your pension pot into guaranteed regular income for the rest of your life, no matter how long you live. With a pension annuity, you'll know exactly how much you're getting, come rain or shine.

Why get a quote with Legal & General?

Help getting you the best deal

When you get a quote with us, we'll also check if there are better deals available. You'll also have the option of seeing who's offering this by visiting our partner website Annuity Ready.

Compare products and options

As well as getting a quote for our Pension Annuity, you can also quote for our Fixed Term and Cash-Out Retirement Plans. You’ll be able to get multiple quotes on different products to see how the different options affect your level of income.

Trusted annuity provider

UK families have been trusting Legal & General to look after their finances for over 185 years. When shopping around for an annuity one in every five people choose us.

Annuity options
Considerations
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A fixed or increasing income
You can choose a fixed income that always stays the same or set your income to increase every year to help you keep up with inflation. It can increase by a set percentage or in line with the Retail Price Index (RPI). It’s worth remembering that the higher the increase you choose, the lower your starting income will be.

Payment options
You can choose monthly or yearly payments and you can select to be paid at the start (in advance) or at the end (in arrears) of the month or year you’ve selected.

Guaranteed minimum payment period
You can guarantee to have your income paid for a certain amount of time – up to 30 years – once your annuity starts. If you die during this time, we’ll continue to pay your income to anyone you choose until the end of this period.

Choose to protect all or part of the amount used to buy your annuity.
When you die we'll pay a lump sum for the amount protected, minus any income payments already made. You can protect 25%, 50%, 75% or 100% of the original amount used to buy your annuity.

Options to support your dependants
You can continue to have your payments paid to a loved one after you die by choosing either 50%, 67% or 100% of your income.
What is an Enhanced Annuity?

If you have any medical conditions or lifestyle risks then you could get a higher income, with an ‘enhanced annuity’. When getting a quote online there is a section to capture these details. This also applies to your partner and could mean you receive a higher income.

When providing your information it’s important to share accurate personal health information with us, as this may help provide you with a higher income. We may ask for a report from your doctor to confirm information you've given us. Your income may be changed if we find the report doesn't match your application.

Find our more about enhanced annuities
Once agreed, it can't be changed
You'll need to be certain of the choices you make - there's no going back once the cancellation period ends and your Pension Annuity has started.

No cash-in value
The Pension Annuity can’t be cashed in or surrendered.

Your income is taxable
Income above your personal allowance is taxable. It may also affect any means-tested benefits you might receive. The amount of tax you pay on income from the plan will depend on your circumstances, and may change based on your income tax rate.

You may get back less than you paid
Depending on how long you live and the options you choose, you may receive less in income payments than the amount of the pension pot you used to buy the Pension Annuity.

Inheritance Tax
Death benefits from a pension are generally exempt from Inheritance Tax where the pension trustees have discretion over who receives them. However, there are some scenarios where Inheritance Tax may still apply.

Retirement income products compared

	Pension Annuity	Pension Drawdown	Cash-Out Retirement Plan	Fixed Term Retirement Plan
Choice of guaranteed monthly income	✔	✗	✔	✔
Income guaranteed for life	✔	✗	✗	✗
Can change monthly income	✗	✔	✗	✗
Exposed to market risk	✗	✔	✗	✗
Lump sum at the end	✗	✗	✗	✔

Compare incomes with our Retirement Income Calculator

Pension Annuity Key Features Terms and Conditions

The choices you make may affect your income for the rest of your life, and you can't change your options later. We strongly recommend seeking financial guidance or advice.

Pension Wise is a government service from MoneyHelper that offers free impartial pension guidance. Available if you're 50 or over, you should consider having a free Pension Wise appointment, before you decide how to access your pension.

Annuity rates reach 14-year high

Could now be the best time to buy an annuity? We look at what this means for your retirement income, as annuity rates rose in 2022.

Based on Legal & General annuity rates, Oct 2022.

Annuity rates article

Common annuity questions

What is the difference between an annuity and a pension?

Why are you being asked if you received guidance from Pension Wise?

From 1 June 2022, the Financial Conduct Authority now requires pensions providers to refer customers to Pension Wise guidance and explain the nature and purpose of this guidance, when they decide to access their pension savings.

Pension Wise from MoneyHelper is a free and impartial Government pension guidance service.

Your decision about which options to choose is likely to be influenced by many factors, such as how much income or cash you need now and in the future. You should also consider your personal circumstances and the impact that your choices may have on taxation, State Benefits, Annual Allowances and any dependants.

Can I sell or transfer an annuity?

What is an enhanced annuity?

What happens to an annuity when you die?

How many types of annuity are there?

Next steps

Now that you’ve learnt more about our Pension Annuity, why not look at other products available as part of your shopping around. Other providers may have more appropriate products or be able to offer a higher level of retirement income.

Fixed Term Retirement Plan

Cash Out Retirement Plan

Pension Drawdown

Annuity articles

Enhanced annuities explained

Later life health problems can make enjoying your well-deserved retirement years harder than it should be. They can hit your finances too, pushing up the cost of day-to-day living and creating new care and support costs.

Enhanced annuities explained

Buying an annuity

Deciding that an annuity’s the right choice for you is only the beginning. You still need to look around, find the right one and then buy it. We’re going to give you some key pointers to help you do just that.

Guide to buying an annuity

How annuities work

Many people are looking for reliable ways of funding their later years. Perhaps you want to make sure the bills are covered for the foreseeable future. Maybe you’d like to fund those trips you’ve always dreamed of taking, or that hobby you’ve always loved so much. Or you might just want to top up your income when you switch to working part time.

How annuities work

Need some help?

Making well-informed decisions about how to finance your retirement is important so it’s worth shopping around and using available guidance and advice, before you buy:

Retirement guidance

Pension Wise from MoneyHelper

The government’s free and impartial service, offering guidance to make money and pension choices clearer.

To find out more or book an appointment online click below or call.

0800 138 3944
8am to 6.30pm, Monday to Friday.
Calls may be recorded and monitored.

Book an appointment

Speak to us

Our colleagues in Cardiff are always happy to answer your questions or help you apply for a quote.

0800 048 2446

Monday to Friday
9am to 5pm
We may record and monitor calls.

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Pension Annuity

What is a Pension Annuity?

Help getting you the best deal

Compare products and options

Trusted annuity provider

What is an Enhanced Annuity?

Retirement income products compared

We can give you an online quote if...

We can't give you an online quote if...

Annuity rates reach 14-year high

What is the difference between an annuity and a pension?

Why are you being asked if you received guidance from Pension Wise?

Can I sell or transfer an annuity?

What is an enhanced annuity?

What happens to an annuity when you die?

How many types of annuity are there?

Next steps

Enhanced annuities explained

Buying an annuity

How annuities work

Retirement guidance

Pension Wise from MoneyHelper

Speak to us

Get financial advice