Annuity vs Drawdown Calculator 2026/27
Compare 25% PCLS + annuity (guaranteed) vs drawdown (4% sustainable) across pension pot sizes + retirement ages.
Pot + age scenarios
| Pot | Age | PCLS 25% | Annuity income / yr | Drawdown 4% / yr |
|---|---|---|---|---|
| £100,000 | 60 | £25,000 | £5,400 | £3,000 |
| £100,000 | 65 | £25,000 | £5,850 | £3,000 |
| £100,000 | 70 | £25,000 | £6,300 | £3,000 |
| £250,000 | 60 | £62,500 | £13,500 | £7,500 |
| £250,000 | 65 | £62,500 | £14,625 | £7,500 |
| £250,000 | 70 | £62,500 | £15,750 | £7,500 |
| £500,000 | 60 | £125,000 | £27,000 | £15,000 |
| £500,000 | 65 | £125,000 | £29,250 | £15,000 |
| £500,000 | 70 | £125,000 | £31,500 | £15,000 |
| £750,000 | 60 | £187,500 | £40,500 | £22,500 |
| £750,000 | 65 | £187,500 | £43,875 | £22,500 |
| £750,000 | 70 | £187,500 | £47,250 | £22,500 |
| £1,000,000 | 60 | £250,000 | £54,000 | £30,000 |
| £1,000,000 | 65 | £250,000 | £58,500 | £30,000 |
| £1,000,000 | 70 | £250,000 | £63,000 | £30,000 |
Frequently asked questions
Annuity vs drawdown - which is better?
Annuity = guaranteed income for life. Drawdown = flexibility + investment growth + inheritance. Mixed strategy often optimal: annuity for "income floor", drawdown for discretionary.
Current annuity rates 2026
June 2026: Age 60: ~7.2%. Age 65: ~7.8% (best rates 7.86% Aviva). Age 70: ~8.4%. Age 75: ~9.4%. Single-life level. Joint-life or escalating reduces rate 10-40%. Rates at 18-year highs due to gilt yields.
4% drawdown rule
Bengen 4% rule: sustainable withdrawal rate. £500k pot = £20k/year. Inflation-adjusted. 30+ year sustainability typical.
MPAA trigger
Taking drawdown income (not PCLS only) triggers Money Purchase AA = £10k. Reduces pension contribution capacity from £60k.
IHT April 2027 implications
Pensions enter IHT estate from April 2027 unless spouse / charity beneficiary. May favour drawdown + lifetime gifting over annuity preservation.