Annuity Calculator UK

There are various factors that influence the annuity rates that you will be offered by providers. The following factors are of particular importance in provider’s annuity calculations:

The size of your pension fund(s)

Of course, the overall amount that you have in your pension(s) to purchase an annuity influences the annual income you receive. Higher pension pots mean higher annual incomes.

Your life expectancy

The longer you have to live, i.e. the more years of retirement you have, the more payments that your pension pot must be spread out over.

Your age at time of purchase

Naturally, the younger you are the more payments that your fund must be spread out across.

Government gilts yields and other fixed interest investment returns

The returns on government gilts and other fixed interest investments influence the performance of annuities. The higher that gilt returns are, the higher annuity rates will be. Currently, gilt returns are suppressed to low-levels.

Your home post-code

Annuity providers are now using post-codes as a means to calculate annuity rates for retirees. The premise is, by localizing life expectancy rates they are able to predict more accurately how long a person may live.

As such, an individual living in Glasgow’s impoverished East End, where life expectancies are below national average, will get a higher annuity rate than someone living in the Home Counties where people live longer (all other factors being equal).