What is the difference between an ordinary annuity and an annuity due?

An ordinary annuity makes payments at the end of each period, while an annuity due makes payments at the beginning. An annuity due is worth slightly more because payments are received earlier.

How are UK pension annuity rates determined?

UK pension annuity rates are influenced by gilt yields, your age, health, and the type of annuity chosen. Shopping around using the open market option typically secures a better rate.

Can I calculate how much I need to save for a target annuity income?

Yes, by entering your desired regular payment amount and expected interest rate, you can work backwards to find the lump sum needed to generate that income stream.

Annuity Calculator UK | CalculatorZone

Useful next calculations

Use the Present Value CalculatorContinue with the related investments question this result raises.
Use the Pension Contribution CalculatorContinue with the related tax & salary question this result raises.

Rates and sources

Compound growth assumes reinvested returns and no platform fees. Past performance is not a guide to future returns.

Source: FCA — Investment basics. Check the linked guidance and any live quote before acting.

When to use this calculator

Before choosing between saving, investing or changing a contribution.
When you want to compare cautious, base and optimistic return assumptions.
When you need a projection before making a longer-term decision.
When you want to see whether starting earlier or contributing more changes the outcome more.

A worked example

These are the example figures the calculator opens with.

A worked example
Input	Value
Regular Payment (£)	£500
Annual Interest Rate (%)	5%
Years	20
Type (0=Ordinary, 1=Due)	0

For those figures the calculator returns:

Present Value: £75,762.66
Future Value: £205,516.83
Total Paid: £120,000.00
Monthly Payment: £500.00

Method & assumptions

This calculator estimates the annual or monthly income an annuity might generate from a given pension pot, based on a hypothetical annuity rate you enter. Annuity rates are expressed as the annual income paid per £100,000 of pension fund and vary by provider, age, and product type. Because rates change frequently with gilt yields and market conditions, this tool uses a rate you supply rather than a live rate.

The calculator does not model enhanced annuities available to those with health conditions, which can pay significantly more. It also does not account for the tax-free cash you may choose to take before purchasing the annuity, which would reduce the pot size. The 25% pension commencement lump sum is tax-free under current UK rules, subject to the lump sum and death benefit allowance. Always obtain quotes from multiple providers before purchasing.

Common mistakes

Assuming a constant return without checking a more conservative growth rate.
Forgetting ongoing contributions, fees or tax wrappers where relevant.
Focusing only on the final balance instead of the path required to reach it.
Ignoring the drag of charges over a long period.

What to do next

Test a cautious, expected and optimistic growth rate.
Compare this result with related savings or retirement tools before committing more money.
Consider charges and any tax wrapper that applies.
If the projected balance falls short, increase the contribution until the result meets your goal.

Questions people ask

An annuity is a series of equal payments made at regular intervals over a set period. In the UK, pension annuities provide a guaranteed income in retirement in exchange for a lump sum.