Estimate your fixed-term annuity income
A fixed-term annuity pays a guaranteed income for a set number of years — typically 3 to 10 — and then returns an agreed lump sum (the "guaranteed maturity value") so you can decide again: buy a lifetime annuity, move to drawdown, or take a new fixed term. Use the calculator below to get an indicative income figure, then check the worked table underneath.
| Pension pot to use | |
| Term (years) | |
| Money back at end of term | |
| Indicative annual rate | |
| Indicative yearly income | — |
Indicative only, August 2026. Real quotes depend on provider pricing and prevailing gilt yields at the time — treat this as a planning ballpark, not an offer.
Worked examples: £100,000 fixed-term annuity
These static figures use the calculator's mid assumption of 4.5% a year, so the page is useful even with the tool switched off. Both columns assume a £100,000 purchase price.
| Term | Income with 50% (£50,000) returned at maturity | Income with nothing returned |
|---|---|---|
| 3 years | ~£20,400/yr | ~£36,400/yr |
| 5 years | ~£13,600/yr | ~£22,800/yr |
| 7 years | ~£10,700/yr | ~£17,000/yr |
| 10 years | ~£8,600/yr | ~£12,600/yr |
The pattern is intuitive: shorter terms and smaller maturity values mean higher income, because more of your capital is being paid back to you each year. The trade-off is what's left at the end.
What this calculator does — and deliberately doesn't — model
The tool above solves one clean equation: how much yearly income a pot supports over a term once a chosen maturity sum is set aside, at your selected interest assumption. Real provider quotes layer on things a planning calculator shouldn't guess at: their live pricing margin, whether income is paid monthly in advance or arrears, optional death benefits, and any underwriting. Health makes far less difference here than with lifetime annuities, since payment length is fixed by the contract rather than by life expectancy. Treat a gap of a few percent between this estimate and a genuine quote as normal — and treat any provider quote dramatically better than the optimistic setting with suspicion, because it usually means the maturity value is investment-linked rather than guaranteed.
How a fixed-term annuity actually works
You hand a provider part of your pension pot. In return you get three contractual promises: a guaranteed income for the term, a guaranteed maturity value at the end, and no investment risk in between. Unlike a lifetime annuity, nothing depends on how long you live — if you die during the term, the remaining payments and maturity value typically pass to your estate or beneficiaries, depending on the options chosen.
At maturity you're back in control. Many people use a fixed term as a bridge: covering the years between stopping work and the State Pension starting (£12,548 a year in 2026/27 for the full new State Pension), or holding off on a lifetime annuity until they're older — when rates are naturally higher — or until a health condition qualifies them for enhanced terms.
When fixed-term beats lifetime — and when it doesn't
- Choose fixed-term if you want guaranteed income now but expect your circumstances to change: rates at your older age will be better, your health may qualify you for an uplift later, or you simply aren't ready for an irreversible lifetime commitment.
- Choose lifetime if longevity protection is the point. A healthy 65-year-old can currently get about 7.75% on average (best buy ~8.36%, August 2026) guaranteed until death — a fixed-term product never insures you against living to 100.
- Beware reinvestment risk. If lifetime rates fall during your term, the maturity value buys less income than it would today. That risk cuts both ways, but it's real: today's 18-year-high rates are not guaranteed to be there at maturity.
For the product fundamentals see our main fixed-term annuity guide, and when you're ready to compare providers, the best fixed-term annuity providers page covers who offers what. A broader tour of temporary products is in short-term annuities explained.
Picking the right term: anchor it to a real date
The most robust way to choose a term is to tie it to something fixed in your life rather than a round number. The classic anchor is your State Pension age: retire at 62 with a State Pension due at 67 and a 5-year term bridges the gap exactly, after which £12,548 a year (2026/27 rate) of index-linked income takes over the baseline. Other common anchors: the end date of a mortgage, a partner's planned retirement, or the runway until a defined benefit pension from an old job starts paying. A term that ends the same year another income begins means the maturity value arrives precisely when your needs change — which is the whole point of the product.
A worked bridge: a 62-year-old with £150,000 who needs £18,000 a year until their State Pension at 67 could put roughly £120,000 into a 5-year fixed term with no maturity value (indicatively ~£27,300 a year at the calculator's mid rate — more than needed, so a smaller purchase or a partial maturity value tunes it down) and keep the remaining £30,000 invested. The right structure is rarely the first one you price, which is why the calculator lets you iterate.
Fixed-term annuity vs just holding cash or bonds
A fair challenge: if the product roughly returns your capital with interest over a known period, why not build the same thing yourself with savings accounts or a gilt ladder? Sometimes you can. The annuity's advantages are automation (income arrives monthly without management), institutional pricing on long-dated assets, and contractual certainty that survives rate cuts on savings accounts mid-term. Its disadvantages are inflexibility — you cannot normally break the contract early — and that pension money moved into cash outside a wrapper loses tax shelter. For short horizons and confident DIY investors the gap is narrow; for anyone who wants to set the bridge income and forget it, the contract does the work.
Before you buy: three checks
First, compare the fixed-term quote against a lifetime quote on the same money — at current August 2026 rates the lifetime income may be closer than you expect. Second, check the death benefits and whether the maturity value is truly guaranteed rather than investment-linked. Third, remember income above your Personal Allowance is taxable, and a high-income short term can push you into a higher tax band in those years. A fixed-term annuity is a genuinely useful halfway house, but the shape matters enormously — an FCA-regulated adviser can model the term, maturity value and tax position against your actual retirement plan.