The best annuity for £100,000

3 min Read Published: 12 Sep 2023

How to find the best annuity for £100,000

Over-50s life insurance - what is it & is it worth buying?Anybody approaching retirement needs to think about what is the best way to take their pension income to support themselves in retirement. With the relaxation of income drawdown rules, pensioners can now gain greater access to their pension fund rather than just take a standard annuity in retirement. However, annuities can still play a significant role in any pension planning and should not be dismissed too readily in the rush to get hold of cash from a pension pot. But before I tell you the best annuity rate for £100k it's important to understand what an annuity actually is.

What is an annuity?

An annuity provides a regular income for an agreed period of time in exchange for all or part of your pension pot. The level of income provided will depend on a number of factors such as - the size of your pension pot, your age, health and any minimum payment guarantees. For further information, check out our article 'What is an annuity and how does it work?'

Should I buy an annuity?

Using all or part of a pension pot to purchase an annuity can still be a sensible option to guarantee that there is a regular income to pay your bills in retirement. Although getting your hands on your entire pension pot can be appealing consideration should be given to maintaining your standard of living in retirement. There are also tax implications when drawing a cash sum from your pension as any tax payable will be charged at your marginal rate of income tax.

How much income could I get from a £100,000 annuity?

The amount of income received from an annuity will depend on a number of factors

  • whether it is a single or joint life annuity
  • whether you want the income guaranteed for a number of years
  • whether you want the income to increase in order to keep in line with inflation

The following table shows these choices can affect the income generated for a male aged 65 next birthday. The best annuity rate for 100k is:

Annuity type (Male aged 65) Annual Income
Single annuity £7,373
Single annuity guaranteed for 5 years £7,317
Single annuity guaranteed for 5 years - increasing by 3% p.a. £5,319
Joint annuity £6,921
Joint annuity - increasing by 3% p.a. £4,840

The above are indicative of best annuity rates for £100,000 available September 2023

Is it worth delaying the purchase of my annuity?

If you are able to delay buying an annuity then the annual income available will increase but you will need to consider the following points.

  • your pension pot may increase in value if left invested, however, investments can go down as well as up which may reduce the amount available to purchase an annuity in the future
  • any increase in annual income paid due to delaying the purchase of an annuity could be offset by the number of years of annuity payment that would be forfeited

The table below illustrates the potential effect of delaying the purchase of a £100,000 annuity by 5 years:

Annuity Type Annual Income age 65 Annual Income age 70
Single annuity £7,373 £8,244
Single annuity guaranteed for 5 years £7,317 £8,138
Single annuity guaranteed for 5 years - increasing by 3% p.a. £5,319 £6,256
Joint annuity £6,921 £7,588
Joint annuity - increasing by 3% p.a. £4,840 £5,546

The above are indicative of best annuity rates for £100,000 available September 2023

I am currently in poor health will that affect my annuity income?

If you have been diagnosed with an illness or have other health problems that could reduce your life expectancy then you might be able to obtain an increased income from your annuity. This is often referred to as an enhanced annuity.

The following conditions may result in being considered for an enhanced annuity

  • Cancer
  • Diabetes
  • Heart attack
  • Stroke
  • Kidney failure
  • Multiple sclerosis

If you have any condition not named above but are receiving ongoing medical attention then it is worth checking with an annuity provider to see if you would be considered for an enhanced annuity. Also smokers can get better annuity rates.

How to find the best annuity for £100,000

If you already have a pension plan with a pension provider then they will inform you of your options approximately six months before your selected retirement date. Their pack will inform you of the annuity options available together with the benefits of shopping round for the best annuity available across the whole market.

I would recommend using this annuity calculator provided by MoneyHelper (formerly the Money Advice Service) which will help you find the best annuity for your needs. Purchasing an annuity is a 'one time' opportunity to get the best retirement income your money can buy so make sure you use a comparison tool like the one above to get the best deal.

Once you have selected the annuity provider and the type of annuity you require you can contact the provider direct and they will arrange the annuity for you. I would also recommend using an independent financial adviser* to discuss all your pension needs.



If a link has an * beside it this means that it is an affiliated link. If you go via the link Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers - VouchedFor