pensions
Annuity calculator
This is an annuity calculator which is designed to show you how
much your pension fund might buy you as annual income in
retirement.
When you can buy an annuity
For most people, a pension annuity will be purchased between the
ages 50 and 75. However the minimum retirement age will rise from
50 to 55 in 2010 and a few people in special circumstances may be
able to avoid annuity purchase at age 75, but most people will
purchase an Annuity aged between 50 and 75.
Age
The amount your pension fund will buy depends on your age,
gender and state of health as these three factors affect how long
you are expected to live. The older you are when you buy an
annuity, the higher the amount you are likely to be quoted because
the annuity provider (an insurance company) is unlikely to have to
pay you for as many years as someone who starts taking their
annuity income at a younger age.
State of health
Similarly, if you are suffering from a medical condition or
illness which is likely to reduce your life expectancy, your
annuity provider will pay you more because you are likely to
survive fewer years than someone in good health of the same age.
The same applies if you are a smoker or obese.
Gender
Women tend to live longer than men, so a woman is paid less than
a man of the same age and with the same size pension fund.
Spouses’ and partners’ pensions
If you want your spouse or partner to have an income after you
die, you will want to buy a ‘joint life’ annuity. This will reduce
the amount you receive (compared to if you bought a ‘single life’
annuity), but will guarantee your partner or spouse an income for
life after your death. Enter their age in the ‘partner’s age’
box.
You can choose what percentage of your annuity income you want
your partner to receive – typically, 100%, 66% or 50%. The higher
the amount you choose for your partner, the lower your initial
income will be.