A guaranteed income for life.

What is an annuity?

What is an annuity?

An annuity provides a guaranteed income for life. Scottish Widows offers both Standard and Enhanced Annuities.

Who is it for?

Who is it for?

You are eligible for a Scottish Widows annuity if you:

  • Have a pension fund of at least £10,000 after tax-free cash or already have an existing Scottish Widows Pension.
  • Are resident in the UK or Northern Ireland (excluding the Channel Islands and the Isle of Man) or an existing Scottish Widows pension customer.
You can normally buy a Standard or Enhanced Annuity with Scottish Widows from age 55 up to age 85. A Standard Annuity is available up to age 99 for customers who take financial advice.
(From April 2028, the earliest age at which you can normally take benefits will increase from 55 to 57. You may be able to take benefits earlier than this if you have a protected pension age.)
Some Scottish Widows plans may require you to take your retirement benefits or transfer to another plan before the age of 75.

An annuity may be suitable for you if you:

  • Want a guaranteed income for life.
  • Don’t want your pension to be subject to any investment risk.
  • Want an option to provide a guaranteed income for a dependent after your death.

Key features and benefits

Key features and benefits

  • Take a tax-free cash sum, normally up to 25% of the value of your existing pension fund and use the remainder to buy a taxable income for life.
  • Income payments can be taken monthly, quarterly, half yearly or annually, in advance or in arrears.
  • Optional guaranteed period of up to 30 years, making sure your income payments continue to be paid if you die during that time.
  • Optional value protection of up to 100% of the amount used to buy the annuity for the rest of your life. This means, some or all of your pension fund is paid as a lump sum if you die before you've received the protected amount as income payments.
  • Payments can be level, linked to RPI, or increase at a fixed percentage. This is only available if you take financial advice or seek guidance through an intermediary. Different indexation options may be available if you are an existing pension customer.
  • You can choose to have income for a dependant paid to your surviving husband, wife, registered civil partner or other adult dependant after you die.
  • Our Enhanced Annuity takes into account your health and lifestyle, and could give you a higher income than a Standard Annuity.

Things to be aware of

Things to be aware of

  • Before committing to buying an annuity, you should consider all of the pension options that may be available to you and shop around with other providers.
  • Certain features may have an impact on the amount of income received.
  • You don’t need to take your annuity from the company you have saved with – you can take it from any annuity provider, which allows you to choose the most suitable option. Shopping around like this could mean you get a better retirement income.
  • Inflation will reduce what you can buy with your income if you choose a level annuity or one that increases at a rate lower than inflation.
  • The amount of income you get back may be less than the cost of buying the annuity. Choosing value protection or a guaranteed period can help protect against this.
  • You can’t cash in your plan or change the basis of your income even if your circumstances change.
  • If you transfer to us from another provider to purchase an annuity, any guaranteed benefits associated with this could be lost on transfer.
  • When you die, your income will stop unless you have bought an annuity with a dependant’s income or a guaranteed period.
  • We’ll deduct tax from each income payment before it’s paid. HM Revenue & Customs will notify us of the relevant tax allowances and we’ll take these into account in working out how much tax to deduct. Your tax treatment will depend on your individual circumstances. Your circumstances and tax rules may change in the future.

How long will I live?

How long will I live?

Many people underestimate how long they will live – a 65 year old man can expect to live to 85*, and a 65 year old woman to age 87*.
(*Source: ONS, December 2021)
If you retire at age 65, your pension pot could need to provide an income for 20 or more years of retirement.
An annuity can provide a guaranteed income for life, regardless of how long you live.
Use this calculator, provided by the Office for National Statistics, to see how long you might live. We recommend you take life expectancy into account when deciding how to provide your retirement income.

Frequently asked questions

  • There are a number of different types of annuities and most will pay a guaranteed income for life. You also have the option to ensure your dependant would receive an income from your annuity after your death, which would continue for the rest of their life. We offer Standard Annuities and an Enhanced Annuity, which can offer a higher income to those who have health or lifestyle factors which mean they have a lower life expectancy.

  • With a standard annuity, the income you will receive is largely determined by your age, where you live and interest rates.

    An enhanced annuity offers a level of guaranteed income which also takes into account your health and lifestyle. You might get a higher level of income if you have a medical condition or lifestyle that could reduce your life expectancy.

    Even if you think you are healthy, if you are a smoker, overweight or taking any medication, you could receive a higher income than a standard annuity.

  • You can choose to have your income paid monthly, quarterly, half-yearly or yearly which can be made:

    • In advance – where the first payment will be made as soon as possible after your policy has been set up.


    • In arrears – if you choose monthly payments, the first payment will be one month after your policy has been set up.
  • Your income can:

    • be a fixed amount (in other words, it doesn’t increase each year)
    • increase at a fixed rate each year (for example, 3%)
    • vary each year in line with the Retail Prices Index (RPI), if RPI is negative, your income could go down.
    • there may be further options for some existing pension customers, such as annuities linked to the Consumer Prices Index (CPI).
  • You can guarantee your annuity for up to 30 years. If you choose this option, it means the income will continue to be paid even if you die before the specified period is up.

    Selecting a guarantee period will provide a slightly lower level of income, but it guarantees that your income continues to be paid for the remainder of the period.

    • If you’re buying your annuity through a financial adviser, and don’t wish to have a guaranteed period, you can choose to protect up to 100% of the amount used to buy the annuity. This is called value protection, and can pay a lump sum when you die. If you choose a dependant’s income, any lump sum would only be paid after both you and your dependant have died.
    • The lump sum will be equal to the protected amount minus the total income payments paid to you and any dependant (before tax). If the total income payments are greater than the protected amount, no lump sum will be paid.
    • You can tell us who you would like to receive any lump sum but in order to ensure that the lump sum isn't subject to inheritance tax, we have the discretion to decide who receives it.
    • The lump sum will be free of income tax if you die before age 75. If you die after age 75, the amount of tax will depend on the beneficiary's individual circumstances.

      Inheritance Tax won't normally be payable unless we have to pay the lump sum to your estate.
    • Selecting value protection will reduce the income you get from your annuity at outset, but it guarantees that at least the protected amount of the pension pot you used to buy your annuity will be paid out as income.
  • If you’ve chosen a dependant’s income and the dependant is still alive when you die, we will start to pay their income in line with how you set up your annuity.

    If you die before age 75, any income paid to a dependant will be paid free of income tax.

    If death occurs after age 75, income will be paid to your dependant net of income tax at their marginal rate.

    A dependant can be your surviving husband, wife, registered civil partner or other adult dependant.

  • Any costs for advice and services from a financial adviser can be paid to them from your plan via an adviser payment.

    Our charges have been taken into account when we calculated your income.

  • With annuities you could get a higher income by shopping around.

    It’s important to check whether you are eligible for an enhanced annuity, as you could get a higher income based on your health or lifestyle. Medical conditions and lifestyle factors taken into account will generally be the same across providers, although some providers will accept different conditions.

    It is likely that each provider will apply a different approach to underwriting health conditions and this could result in a higher or lower income being offered by them.

    Other types of annuities with a range of options will be available, however not all pension providers will offer them. You must think carefully about what you want from an annuity as you cannot change your mind once you have bought it.

    Other types of annuity include:

    • investment-linked annuity – offers the chance of a higher income but there is investment risk and the income could go down
    • fixed-term annuities – provides you an income for an agreed amount of time, usually between three and 20 years. It may also pay a specified 'maturity amount' when it ends which can be re-invested in another retirement plan.

    Please note, these types of annuity are not available from Scottish Widows.

  • Our annuities are only available to our existing pension plan customers, unless you apply through a financial adviser.

    Some options, such as value protection, are only available if you apply through a financial adviser.

    If you’re an existing pension plan customer, call us.

    If you don’t have a financial adviser find one here.

    Selecting how to take the right retirement benefits for you is probably one of the most important financial decisions you’ll make in your lifetime.

    A financial adviser will be able to help you choose the route which best suits your retirement goals.

    Please note: you'll normally be charged for advice or services provided by a financial adviser.

  • You should shop around before deciding which annuity to buy.

    If you give us your permission to share your details, we can also tell you the best available income from all other annuity providers when we give your quote. You’ll be able to see easily if you could get a higher income elsewhere.

    If we can't provide the highest annuity income available, we may be able to introduce you to our partner, Hub Financial Solutions, who can help you buy an annuity with another provider. You can look to contact your own intermediary or financial adviser should you wish to do so.

    Why not also visit MoneyHelper for advice, tips and tools to help you make the right decision. MoneyHelper is a Government organisation, set up to help you make the most of your money by giving you free, impartial advice.

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