Annuity income from a £1,000,000 pot — the million-pound question.

A million-pound pension is exceptional — only around 4% of UK DC savers reach this level. A single life level annuity at 65 on £1,000,000 might produce around £64,000-£70,000 per year. That sounds extraordinary, but annuitising the full pot would be highly tax-inefficient: combined with the state pension, total income would exceed £75,000, pushing you firmly into the 40% tax band. Almost nobody with a £1M pot should fully annuitise. Instead, most advisers recommend annuitising just enough to cover essential expenditure (perhaps £200,000-£300,000), keeping the bulk in drawdown for tax-efficient phased withdrawals, and using the 25% tax-free cash strategically. The lump sum and death benefit allowance (currently £1,073,100) also becomes relevant at this level — exceeding it means excess lump sum death benefits are taxed at the beneficiary's marginal rate.