Is a guaranteed annuity rate worth it? That turns on what you would give up by moving the pot and on the conditions your policy attaches.

A guaranteed annuity rate (GAR) is a rate written into an older policy; what a GAR is and how to find out whether you have one has its own guide. This page covers the next question: what keeping the guarantee involves, what giving it up can cost, and the legal checks around the choice. It sets out what to weigh and does not say which way to go.

Pension Wise, from MoneyHelper, is the free starting point: MoneyHelper offers people with a UK-based defined contribution pension free appointments "to help you understand the options for taking your money". A second pair of eyes on the policy terms is a reasonable wish, and asking costs nothing: leave your details in this page's form and an FCA-authorised adviser will ring back.

What giving up a guaranteed annuity rate can cost

The case for a GAR is about income. MoneyHelper's guide to guaranteed annuity rates said, in its most recent archived copy (17 October 2025), that where a pot contains one, the income could be much higher by staying with the current provider than by shopping around. The case against moving is that the guarantee belongs to the policy, so anything that takes the money out of its terms can end it. Three routes are worth separating:

  • Transferring to another scheme to get flexible benefits there, which section 48 of the Pension Schemes Act 2015 lists as "making a transfer payment in respect of any of the benefits with a view to acquiring a right or entitlement to flexible benefits".
  • Converting or cashing in within the same scheme. The same section covers converting the benefits into different flexible benefits under the scheme and paying an uncrystallised funds pension lump sum.
  • Taking an annuity on terms other than the GAR, whether from your own provider or another firm. The FCA's rules have their own check here. A firm that gives you a guaranteed quote for an annuity must compare it with the income your GAR entitles you to. Where the GAR will, or is likely to, pay the most, COBS 19.9.7 requires the firm to show the difference in pounds a year and to warn you that the entitlement "will be extinguished" if you accept the quote, leaving you with a lower annual income.

Questions that help: what income would the GAR give on my pot, in writing; what would an open-market quote give for my age and health; and do I want an annuity at all? MoneyHelper's annuities guide says to compare what different providers will offer whether or not yours has a GAR, and that once you have bought an annuity and any cooling-off period has ended, "you typically cannot change your mind". See how to compare annuity rates, enhanced annuity rates and whether an annuity is worth it.

The advice rules when a GAR is involved

For the first two routes, section 48 says that where a member has safeguarded benefits, the scheme must check you have received "appropriate independent advice", meaning advice from an authorised independent adviser. The FCA's glossary defines safeguarded benefits as anything other than money purchase or cash balance benefits, and the FCA's pension transfer rules deal with a GAR as one. The Department for Work and Pensions, explaining a later change to the advice test, said the most common benefits of this kind by far "offer members the option to secure a retirement income at a guaranteed annuity rate". The guide to GARs sets out the basics; below is how the rules bear on the choice.

The £30,000 test. Regulation 5 of SI 2015/742 lifts the advice check where the transfer value of your rights in safeguarded benefits under the scheme is £30,000 or less on the valuation date. "Transfer value" here is the statutory cash equivalent: broadly, in the department's explanatory memorandum, the payment that "would be made to another scheme in respect of the benefits if the member were exercising a statutory right to transfer". So the test looks at the cash value of the rights that carry the guarantee, not at a price put on the guarantee itself, and any reduction a scheme is allowed to make to an initial cash equivalent is left out of the sum. Only rights in safeguarded benefits count: if part of a plan carries a GAR and part does not, ask the provider which part it has valued. Above £30,000, the scheme must see confirmation of the advice before it goes ahead.

Two points are specific to a GAR. The FCA normally requires transfer advice to be given or checked by a pension transfer specialist, but not where a GAR is the only safeguarded benefit involved (COBS 19.1.1A); the section 48 advice is still needed. And a firm may not give abridged advice on guaranteed annuity rates (COBS 19.1A.2).

At any value, including £30,000 or less, there is a second safeguard. Regulations 8A to 8C require the scheme to send a written risk warning when a member with safeguarded-flexible benefits asks to transfer, convert or take a lump sum, and regulation 8B counts "a guaranteed conversion rate" among the guarantees, even where taking it up is subject to conditions. The warning must say prominently that the guarantee would be lost by going ahead, carry two pension illustrations, and explain when you can take the guarantee up, when you could lose the chance, and "any other material restrictions or conditions". Those terms, such as a set retirement date or limits on the type of annuity, decide whether the GAR fits the income you want; the GAR guide lists the common ones, and joint life annuities and inflation-linked annuities show what a different shape of income changes. If the provider has not sent these details, they are worth asking for in writing. The warning is a legal step, not a recommendation either way.

Policy terms, your health and a partner's needs can pull in different directions. If you would like them weighed together against the guarantee, this page's enquiry form puts you in touch with an FCA-authorised adviser who can read the policy alongside you.

Scam warnings when a guarantee is in play

The FCA says pension scams "often involve attractive offers that aim to persuade you to transfer your pension pot (or release funds from it)", and its list of warning signs includes "a guaranteed better return on your pension savings". A real GAR is a feature of a policy you already hold, so a stranger offering to better it deserves caution. From the same guidance:

  • An unprompted phone call about your pension is safest ended there and then.
  • A "free pension review" that arrives unasked is "likely to be a scam"; professional pension advice costs money.
  • When choosing an adviser, confirm they are FCA-authorised, and do not take advice from whoever contacted you first.

More at the FCA's pension scams page. For the checks a scheme makes before a transfer, see how to transfer a pension.

Questions people ask about keeping or transferring a GAR

Does a guaranteed annuity rate count as a safeguarded benefit?

The FCA's transfer rules treat it as one, with special provisions for cases where a GAR is the only safeguarded benefit, and the 2015 regulations list a guaranteed conversion rate among the guarantees in safeguarded-flexible benefits. Whether your own policy's guarantee is caught depends on its terms, which the provider can confirm.

Can a guaranteed annuity rate be transferred?

A transfer to acquire flexible benefits elsewhere is one of the moves section 48 covers, so the advice check and risk warning described above come first, and the warning has to say the guarantee "will be lost" if you proceed. Ask your provider in writing what happens to it.

What are the best guaranteed annuity rates?

Each rate is set by the terms of one policy, so yours is whatever your policy says. MoneyHelper's advice is to compare it with what other providers would offer you.

Do I need advice for a GAR worth £30,000 or less?

Regulation 5 lifts the advice check where the transfer value is £30,000 or less, but the risk warning still applies. Pension Wise offers free guidance on the options.

Your next step

The weighing comes down to your policy's terms, the income a quote would give, and your wider position. Pension Wise can explain the options free; for a phone conversation about your own policy with an FCA-authorised adviser, fill in the short enquiry form here.

Sources: MoneyHelper, Guaranteed annuity rates and annuities explained (archived copies); Pension Schemes Act 2015, section 48; SI 2015/742 regulation 5, regulations 8A to 8C and the explanatory memorandum to SI 2017/1272; FCA Handbook, COBS 19 and glossary; FCA, Pension scams.