Comparing annuity quotes: match the features before the income
The highest starting income is not necessarily the best annuity quote for your circumstances. Two quotes can use the same pension amount while buying different benefits: income for one life or two, a level payment or increases, and different protection if you die soon after purchase.
Make the features comparable before comparing the annual income. Keep the quote dates and expiry dates visible because a figure obtained earlier may no longer be available.
Begin with the income requirement
Identify what the annuity would need to fund and for whom. Is the purpose to cover a recurring shortfall in essential household spending, support a surviving partner or provide a defined amount for a limited period? That question comes before choosing the product features.
An annuity can convert pension money into taxable guaranteed income, with terms depending on the product. MoneyHelper explains lifetime and fixed-term arrangements, increasing income and benefits for others. These are different features, not interchangeable versions of the same quote. MoneyHelper: annuities explained.
Do not treat an annuity as the only way to access a defined contribution pension. It should be considered alongside the relevant alternatives and any existing scheme benefits.
Use one comparison specification
Prepare a common set of assumptions for providers or an adviser to use. Include the pension amount actually available for purchase after any tax-free cash and charges, the proposed start date and the requested payment features.
| Feature | Detail to compare |
|---|---|
| Duration | Lifetime income or a specified term |
| Lives covered | One person or continuing income for another person |
| Increases | Level, fixed annual increases or a stated inflation link |
| Death protection | Guarantee period or other specified protection |
| Payment timing | Frequency and payment in advance or arrears |
| Personal information | Consistent health, lifestyle and relevant household details |
This table does not prescribe which features to choose. It provides a way to discover whether a higher income is the result of a different benefit being purchased.
A starting-income comparison can mislead
Suppose two fictional quotations offer £7,000 and £6,000 a year. Quote A is level single-life income. Quote B includes annual increases and continuing income for a partner. The £1,000 starting difference is real, but it is not a like-for-like price advantage because the promised payments differ.
Even comparing cumulative payments requires assumptions about survival, future increases and payment timing. A simple break-even year cannot capture every benefit or establish which option is suitable.
Ask for illustrations that explain the trade-offs. For a household reliant on both partners' income, what happens after the first death may matter more than the first year's difference.
Read the increase wording precisely
A level amount can lose spending power when prices rise. An increasing annuity may begin with a lower payment, and its increases depend on its terms. A fixed increase is not the same promise as following a specified inflation index.
Check when increases start, which index applies where relevant and whether limits or other conditions affect them. Then compare the income with the spending it is intended to support. Different expenses may rise at different rates from a national inflation measure.
Avoid calling a quotation inflation-proof without understanding its actual terms. The useful description states exactly how the payment changes.
Supply accurate health information
Health and lifestyle information can affect the annuity terms offered. Complete the questions accurately and consistently. Do not omit a condition because it seems unrelated, or assume an adviser can fill in missing details from an old fact-find.
Keep a copy of the information submitted and ask how corrections will be handled. If one quotation includes fuller medical information than another, the figures may not be directly comparable.
Where specialist underwriting is needed, allow enough time for the process rather than treating an indicative online result as a final offer.
Check existing rights before moving money
Ask the pension provider whether the existing arrangement contains guarantees, protected features or other terms that matter to an annuity decision. Obtain the details in writing. A competitive external quotation should still be compared with benefits that may be lost by transferring or changing the arrangement.
Also establish who is being paid for arranging or advising on the purchase and how that cost is reflected. The amount of pension money used in each comparison should be consistent after relevant deductions.
Before proceeding, understand cancellation rights, deadlines and how difficult the decision is to change once the annuity is established. Retain the accepted quotation and the explanation of why its features meet the intended need. Comparing the whole promise is more useful than comparing a single income number.
Related reading
Sources and context
General educational information, not personal financial advice. Examples are illustrative unless identified as recorded evidence.
Sources checked 18 September 2026. Our editorial standards.