State pensioners aged over 75 can receive an average extra £10,103 per year on top of their Department for Work and Pensions (DWP) state pension payments, according to current annuity rates.
Annuities are a financial product that pensioners can buy using their private pension pot, usually built up from work. The product converts pension savings into a guaranteed annual income that continues until death.
How Annuities Work
Life insurance firm LV explains: “A pension annuity is a lifetime annuity you can buy using the money from your pension pot. It will pay you an income for the rest of your life. To be able to receive a pension annuity, you must be at least 55 years old and have at least £2,000 to invest after you’ve taken any tax-free cash.”
Annuities invest the money, allowing it to continue to grow, while balancing life expectancy against the cost of taking out the product. Similar to life insurance, annuities weigh up age, lifestyle and health factors to determine the annual payout, along with the amount in the private pension.
Average Payout for Over-75s
According to SharingPensions.co.uk, retirees aged 75 and over can, as of September 26, 2026, get £10,103 per year paid out by an annuity on average. This assumes a pension pot of £133,000 before tax for an individual pensioner with a “level rate, no guarantee” option.
Tax and Flexibility Considerations
LV notes that annuities have downsides. They are subject to tax, like the pension pot itself, and cannot be changed or surrendered later. Once purchased, there is no way to get the money back if the buyer changes their mind.
LV adds: “The pension annuity cannot be cashed in or surrendered at any time. Purchasing a pension annuity is a once and for all decision. The options you select when you buy the annuity cannot be changed later on. Annuity payments are classed as income and are subject to income tax, and could affect any state benefits you claim – it is worth seeking advice from a financial professional to see what income tax you may be liable for.”
“Depending on how long you live, you may receive less than you paid for your annuity. Ensure you outline any medical conditions you or your partner have as it may mean you receive a higher annuity income.”
