Our website doesn't support your browser so please upgrade.

  • Skip page header and navigation
  • Personal
  • Private
  • Business
  • Corporate
  • Language English
  • Register 
  • Back to my accounts 
  • Log on Log off
HSBC UK
  • Banking Accounts & services

    Current accounts

    • Premier Account
    • Bank Account
    • Advance Account
    • Student Account
    • International Student Account
    • Children's Account
    • Private Banking Account
    • Business accounts
    • See all current accounts

    Savings accounts

    • Fixed Rate Cash ISA
    • Online Bonus Saver
    • Regular Savings Account
    • Loyalty Cash ISA
    • Fixed Rate Savings Account
    • Children’s Savings Account
    • Easy access savings accounts
    • Compare savings accounts
    • See all savings accounts

    International services

    • Global Money Account
    • Using your card outside the UK
    • Travel Money
    • International payments
    • Currency Account
    • Opening an account outside the UK
    • Open a UK account
    • See all international services

    Already banking with us?

    • Existing customers
    • Money worries
    • Manage your account
    • Mobile banking
    • Online banking
    • Overdrafts
    • Overdraft calculator
    • Overdraft repayment calculator
  • Borrowing Short & long-term

    Credit cards

    • Balance transfer credit cards
    • Purchase cards
    • Rewards cards
    • Credit building cards
    • Premier cards
    • Ways to borrow
    • Credit card eligibility checker
    • See all credit cards

    Loans

    • Personal Loan
    • Premier Loan
    • Car Loan
    • Home Improvement Loan
    • Top up your loan
    • Ways to borrow
    • Debt Consolidation Loan
    • HSBC Flexipay
    • See all loans

    Mortgages

    • Switch your mortgage rate
    • Remortgage to HSBC
    • First-time buyers
    • Get a decision in principle
    • Moving home
    • Mortgage rates
    • Mortgage calculators
    • Continue my application

    Already borrowing with us?

    • Mortgage charter
    • Manage your existing mortgage
    • Money worries
    • Mortgage payment support
    • Manage your credit card
    • Credit card fees and rates
    • Base rate information
    • Credit card repayment calculator
  • Investing Products & planning

    Investing

    • New to investing?
    • Stocks & shares ISA
    • Invest in funds
    • Invest in shares
    • See all investments

    Advice

    • Financial advice
    • Premier investment management
    • Protection advice

    Retirement

    • Retirement calculator
    • Investing for retirement

    Wealth planning

    • Future Planner
    • Investment goals
    • Your financial action plan
    • Investment calculator
    • Children’s education calculator
    • Wealth Insights

    Already investing with us?

    • Manage your investments
    • How to use investment goals
    • How to use our Global Investment Centre
    • How to use InvestDirect
    • Onshore Investment Bond
    • Child Trust Fund
    • Manage your Flexible Retirement Account
  • Insurance Property & family

    Insurance

    • Home Insurance
    • Contents Insurance
    • Travel Insurance
    • Small Business Insurance
    • See all insurance

    Life

    • Life Cover
    • Critical Illness Cover
    • Income Protection Insurance
    • Protection advice
    • See all life insurance

    Claims

    • Select and Cover claims
    • Home Insurance claims
    • Life Insurance claims
    • Travel Insurance claims
    • Aspects Insurance claims
    • Premier Travel Insurance claims

    Already insured by us?

    • Home Insurance support
    • Life Insurance support
    • Premier Travel support
    • Aspects Insurance support
  • Wellbeing Financial health & support

    Financial fitness

    • Financial health tools & webinars
    • Everyday budgeting
    • Managing debt
    • Growing your money
    • Staying safe and secure
    • Learning about money

    New beginnings

    • Expanding your family
    • Getting married
    • Planning for retirement
    • Buying your first home
    • Moving abroad
    • Going to uni

    Life events

    • Bereavement support
    • Assisting someone with their money
    • Separation
    • Losing your job
    • Power of Attorney
    • Mental health and support
    • Tell us your support needs

    Money worries

    • How we can help
    • Mortgage payment support
    • Financial and domestic abuse
    • Managing your finances
    • Rising cost of living
    • Support for gambling
  • Help Service & security

    Managing your account

    • Rising cost of living
    • Ways to bank
    • Card support
    • Making payments
    • Set up or cancel a Direct Debit
    • Set up or cancel a standing order
    • Query a transaction

    Fraud and security

    • Fraud guide
    • Received a text?
    • HSBC Safeguard
    • Secure Key
    • Our Digital Security Promise
    • Verify your ID online

    Digital banking

    • Register for digital banking
    • Mobile banking
    • Online banking
    • Banking at home
    • Mobile cheque deposit
    • Reset your log on details
    • Mobile money management

    Help

    • Customer support
    • Service status
    • Money worries
    • Feedback and complaints
    • Digital banking help tool
    • Bank of England base rate
    • Accessibility and disability
    • Sustainability
  • Banking Accounts & services

    Current accounts

    • Premier Account
    • Bank Account
    • Advance Account
    • Student Account
    • International Student Account
    • Children's Account
    • Private Banking Account
    • Business accounts
    • See all current accounts

    Savings accounts

    • Fixed Rate Cash ISA
    • Online Bonus Saver
    • Regular Savings Account
    • Loyalty Cash ISA
    • Fixed Rate Savings Account
    • Children’s Savings Account
    • Easy access savings accounts
    • Compare savings accounts
    • See all savings accounts

    International services

    • Global Money Account
    • Using your card outside the UK
    • Travel Money
    • International payments
    • Currency Account
    • Opening an account outside the UK
    • Open a UK account
    • See all international services

    Already banking with us?

    • Existing customers
    • Money worries
    • Manage your account
    • Mobile banking
    • Online banking
    • Overdrafts
    • Overdraft calculator
    • Overdraft repayment calculator
  • Borrowing Short & long-term

    Credit cards

    • Balance transfer credit cards
    • Purchase cards
    • Rewards cards
    • Credit building cards
    • Premier cards
    • Ways to borrow
    • Credit card eligibility checker
    • See all credit cards

    Loans

    • Personal Loan
    • Premier Loan
    • Car Loan
    • Home Improvement Loan
    • Top up your loan
    • Ways to borrow
    • Debt Consolidation Loan
    • HSBC Flexipay
    • See all loans

    Mortgages

    • Switch your mortgage rate
    • Remortgage to HSBC
    • First-time buyers
    • Get a decision in principle
    • Moving home
    • Mortgage rates
    • Mortgage calculators
    • Continue my application

    Already borrowing with us?

    • Mortgage charter
    • Manage your existing mortgage
    • Money worries
    • Mortgage payment support
    • Manage your credit card
    • Credit card fees and rates
    • Base rate information
    • Credit card repayment calculator
  • Investing Products & planning

    Investing

    • New to investing?
    • Stocks & shares ISA
    • Invest in funds
    • Invest in shares
    • See all investments

    Advice

    • Financial advice
    • Premier investment management
    • Protection advice

    Retirement

    • Retirement calculator
    • Investing for retirement

    Wealth planning

    • Future Planner
    • Investment goals
    • Your financial action plan
    • Investment calculator
    • Children’s education calculator
    • Wealth Insights

    Already investing with us?

    • Manage your investments
    • How to use investment goals
    • How to use our Global Investment Centre
    • How to use InvestDirect
    • Onshore Investment Bond
    • Child Trust Fund
    • Manage your Flexible Retirement Account
  • Insurance Property & family

    Insurance

    • Home Insurance
    • Contents Insurance
    • Travel Insurance
    • Small Business Insurance
    • See all insurance

    Life

    • Life Cover
    • Critical Illness Cover
    • Income Protection Insurance
    • Protection advice
    • See all life insurance

    Claims

    • Select and Cover claims
    • Home Insurance claims
    • Life Insurance claims
    • Travel Insurance claims
    • Aspects Insurance claims
    • Premier Travel Insurance claims

    Already insured by us?

    • Home Insurance support
    • Life Insurance support
    • Premier Travel support
    • Aspects Insurance support
  • Wellbeing Financial health & support

    Financial fitness

    • Financial health tools & webinars
    • Everyday budgeting
    • Managing debt
    • Growing your money
    • Staying safe and secure
    • Learning about money

    New beginnings

    • Expanding your family
    • Getting married
    • Planning for retirement
    • Buying your first home
    • Moving abroad
    • Going to uni

    Life events

    • Bereavement support
    • Assisting someone with their money
    • Separation
    • Losing your job
    • Power of Attorney
    • Mental health and support
    • Tell us your support needs

    Money worries

    • How we can help
    • Mortgage payment support
    • Financial and domestic abuse
    • Managing your finances
    • Rising cost of living
    • Support for gambling
  • Help Service & security

    Managing your account

    • Rising cost of living
    • Ways to bank
    • Card support
    • Making payments
    • Set up or cancel a Direct Debit
    • Set up or cancel a standing order
    • Query a transaction

    Fraud and security

    • Fraud guide
    • Received a text?
    • HSBC Safeguard
    • Secure Key
    • Our Digital Security Promise
    • Verify your ID online

    Digital banking

    • Register for digital banking
    • Mobile banking
    • Online banking
    • Banking at home
    • Mobile cheque deposit
    • Reset your log on details
    • Mobile money management

    Help

    • Customer support
    • Service status
    • Money worries
    • Feedback and complaints
    • Digital banking help tool
    • Bank of England base rate
    • Accessibility and disability
    • Sustainability
  • Language English

Language

  • Selected English
  • Register
  • Back to my accounts
  • Private
  • Business
  • Corporate
HSBC UK
Log on Log off
Top of main content
  1. HSBC UK 
  2. Retirement 
  3. What is an annuity?

What is an annuity?

When you reach retirement age, you might want to think about buying a guaranteed income from your pension pot.

This is known as an annuity.

A retirement annuity can give you a guaranteed income for the rest of your life. You can also choose to receive an annuity for a fixed number of years. You pay tax on this income in the same way you do with your salary.

Buying a retirement annuity can give you peace of mind, because you’ll know exactly how much money you’ll be getting each month. It can help with budgeting for your living costs in retirement.

Of course, you’ll need to have built up a pension pot first. It’s never too early to start planning for your retirement to make sure you can enjoy the standard of living you want after you stop working.

If you haven’t started saving for retirement yet, you’ll need to take steps to make sure you have enough money when you stop working.

Explore: Planning for your retirement

How do annuities work?

The total amount you can get will depend on a few things like:

  • The total value of your pension pot
  • How long you want the payments to go on for
  • Your age when you buy the annuity
  • Your health
  • Your lifestyle and where you live
  • The type of annuity you choose and any associated features

When buying an annuity, you can choose to use all or only some of your pension pot. You can take the first 25% of your pension as a tax-free lump sum first. The remaining balance is used to buy a guaranteed regular income. You pay income tax on these payments.

What are the different types of annuity?

Choosing the right type of annuity for your needs is important. With some types, once you’ve committed to buy, you can’t change your mind later. 

Lifetime annuity

If you want peace of mind that the money in your pension pot won’t run out, a lifetime annuity might be a good option for you.

By choosing this, you receive a guaranteed income for the rest of your life. 

With a lifetime annuity, you don’t have to spend all the money on it, but once you’ve bought one, you can’t change your mind.

Fixed-term annuity

A fixed-term annuity will pay you a set monthly amount for a fixed period of time. This could be anything from one to 40 years. It’s most common to choose between 5 and 10 years. 

The money you spend on your annuity will be invested during the fixed-term period. At the end of the term, you’ll get a lump sum back. This will be for the amount you paid plus any interest from the investment, minus the amount you’ve received in payments.

Investment-linked annuity

Annuities linked to investments can offer a higher rate of return than other types of annuities. However they come with a higher risk that you might not get back as much as you put in. The value of the annuity is tied to an underlying portfolio of investments. Investments can go up as well as down, so it’s a good idea to take advice from a qualified adviser before committing to anything.

The income you get from an investment-linked annuity will depend on:

  • The money you put into the policy in the first place – known as the ‘principal’
  • The returns from the underlying investments

Enhanced annuity

An enhanced annuity is aimed at people who have a life-shortening illness or health problem. 

You might be able to get a higher income if you've had a stroke or a heart attack or have been diagnosed with serious conditions such as cancer, kidney failure or multiple sclerosis.

In these cases, you could be offered a higher annuity rate based on your life expectancy.

What happens to an annuity when you die?

What happens when you die depends on type of annuity you have. 

For example, a lifetime annuity is essentially a contract to pay you a guaranteed income. After this, the annuity provider simply stops paying that income.

Many providers offer extra features which mean your loved ones can still benefit from your annuity after you die.

For example, you can buy a joint life annuity. You will be paid a guaranteed income for the rest of your life. If you die before whoever you choose as the joint life, they will begin to receive a proportion of your income. A 50% joint life annuity is most common, but you can choose other percentages.

You could opt for a guarantee period, which makes sure payments continue for this time even if you die during the term.

There’s also the option of value protection. This is extra cover you can add to an annuity to pass on the value of your annuity to your loved ones, not including any payments you’ve already received.

Any money left to your loved ones from a pension currently doesn’t form part of your estate, like your savings or property do. 

From April 2027, it’s proposed by the government that unused pension pots and death benefits will be included in your estate for inheritance tax. This will include the features mentioned above.

Back to top 

What next?

Understand more about pensions and retirement 

Share

  • facebook This link will open in a new window
  • twitter This link will open in a new window
  • pinterest This link will open in a new window
  • linkedin This link will open in a new window
  • email

Explore more

How much do you need to retire? 

Saving vs investing 

How to manage your pension pot in retirement 

  • About HSBC
  • Help & support

    Contact HSBC Got a question? We're here to help you 
  • Branch finder

    Find your nearest branch 
  • Our service performance

    View our service status to see how we're doing 
  • About HSBC

    Careers, media, investor and corporate information 
  • Legal
  • Privacy notice
  • Cookie notice
  • Accessibility
  • Stopping modern slavery

HSBC GroupHSBC Group This link will open in a new window | © Copyright HSBC Group 2002-2025. All rights reserved

This website is designed for use in the United Kingdom.

Cookies on this website

We use cookies to help keep our website and services working properly. These cookies are necessary and are set automatically.

We'd also like to use some optional cookies that:

  • Make your visit more personal
  • Improve our website based on how you use it
  • Support our marketing

You can either 'Accept' or 'Decline' these cookies or choose what cookies to accept in 'Manage cookies'.

To learn more about how we use cookies, visit our Cookie Notice.