PER Life Annuity Simulator

The life annuity is calculated by applying a conversion rate to the accumulated capital. This rate depends mainly on the retirement age:

• Retirement age: The later you retire, the higher the conversion rate (because remaining life expectancy is shorter). At 60, the rate is about 3.2%; at 65, about 3.8%; at 70, about 4.7%.
• Reversion option:If activated, the annuity is reduced by approximately 25% because the insurer may potentially have to pay the annuity over two lives (yours and your spouse's).
• Estimated total: Annual annuity multiplied by estimated remaining life expectancy (85 years - retirement age, minimum 10 years).

Formula: Annual annuity = PER capital x Conversion rate. Monthly annuity = Annual annuity / 12.

A life annuity is a financial mechanism by which an insurer commits to paying you a regular income until your death, in exchange for the definitive surrender of your capital. Understanding the parameters that determine the amount of your annuity is essential for making an informed decision.

The conversion rate by age

The conversion rate is the percentage of capital that will be paid each year as an annuity. This rate increases with the liquidation age, because remaining life expectancy decreases and the insurer will statistically have fewer years of payments to make. As a guide, average market rates observed in 2026 are approximately: 3.2% at 60, 3.5% at 65, 4.2% at 67, and up to 4.7% at 70. For a capital of 200,000 euros, this represents a gross annual annuity of 6,400 euros at 60 versus 9,400 euros at 70, a considerable difference of 3,000 euros per year.

Mortality tables

Insurers use regulatory mortality tables to calculate statistical life expectancy and determine the conversion rate. The tables currently in force are the TGF05 (for women) and TGH05 (for men), published by the Institute of Actuaries. These tables are conservative: they incorporate safety margins to account for future increases in life expectancy, which has the effect of reducing the conversion rate compared to actual current life expectancy. This is why women, whose life expectancy is statistically longer, generally obtain a slightly lower conversion rate than men at the same age.

The reversible annuity

The reversion option allows your spouse to continue receiving all or part of your annuity upon your death (generally 60% or 100%, depending on the chosen option). In return, your initial annuity is reduced by 15% to 25% depending on the reversion rate and the age difference between the spouses. The younger the spouse relative to the main annuitant, the greater the reduction, as the insurer anticipates a longer reversion payment period.

Optional guarantees

Beyond reversion, several options allow you to customize your annuity. Guaranteed annuities ensure payment of the annuity for a minimum period (e.g., 10 or 15 years), even in the event of premature death of the annuitant: remaining payments are then made to designated beneficiaries. Annuity tiers allow modulating the amount over time (e.g., an increased annuity for the first 5 years then reduced afterwards, or vice versa). Finally, some contracts offer inflation indexation to protect the purchasing power of the annuity over the long term. Each option has a cost that translates into a reduction in the initial annuity amount.

The choice between annuity exit and lump-sum exit is one of the most structuring decisions for your retirement. There is no universal answer: it all depends on your wealth situation, family circumstances, and objectives.

Advantages of the life annuity

The main asset of the annuity is the security it provides: you receive a guaranteed income for life, regardless of market fluctuations and regardless of your longevity. The insurer bears the longevity risk on your behalf. For a healthy retiree, the annuity can prove very advantageous: if you live beyond statistical life expectancy, you will have received more than the value of your initial capital. The annuity also simplifies the management of your wealth in retirement: no more investment decisions or arbitrage management needed, the income arrives automatically each month.

Disadvantages of the life annuity

The main disadvantage of the annuity is the definitive alienation of capital: once converted to an annuity, your savings no longer belong to you and cannot be passed on to your heirs (except with spouse reversion or guaranteed annuity options). In the event of premature death, unpaid amounts remain with the insurer. Moreover, the annuity is generally not indexed to inflation (unless a paid option), meaning its purchasing power can erode significantly over 20 or 30 years of retirement. Finally, current conversion rates remain relatively low due to conservative mortality tables and interest rate levels.

The mixed solution

The PER now allows combining lump sum and annuity in the proportions of your choice. This mixed solution offers the best of both worlds: a lump-sum portion to finance an immediate project or maintain a precautionary reserve, and an annuity portion to secure a regular income. A common split is to withdraw 30% to 50% as a lump sum and convert the rest into a life annuity.

When to prefer the annuity?

The annuity is particularly suitable in the following situations: you are in good health and have a high life expectancy (family history of longevity), you have no direct heirs to whom you wish to pass on your wealth, you want to simplify retirement management without worrying about financial markets, or you do not have sufficient other regular income sources. Conversely, the lump sum is preferable if you have wealth to pass on, if you have projects requiring significant liquidity, or if you are capable of managing your savings independently to generate supplementary income (rental property, dividends, etc.).

Beyond the basic factors (age, capital, reversion), several advanced parameters directly influence the amount and security of your life annuity. Understanding them allows you to negotiate the best terms with your insurer and adapt your annuity to your actual retirement needs.

The actuarial calculation of the conversion rate

The conversion rate is not arbitrarily set by the insurer. It results from a precise actuarial calculation that takes into account three main variables: the life expectancy of the annuitant (based on regulatory mortality tables), the technical interest rate (the minimum return guaranteed by the insurer over the annuity period, capped by regulation), and the contract's management fees. The higher the technical rate, the larger the annuity for the same capital. In a low-rate environment, the conversion rates offered are mechanically less favorable, which has penalized annuity conversions in recent years. With the rise in interest rates since 2022, conversion conditions have gradually improved.

Detailed reversion options

Reversion is not limited to a simple yes or no choice. Several parameters are adjustable: the reversion rate (60%, 80% or 100% of the initial annuity), the choice of reversion beneficiary (spouse, PACS partner, designated cohabitant), and the impact on the initial annuity which varies depending on the age difference between the two lives. A 60% reversion rate reduces the initial annuity by about 10 to 15%, while 100% reversion can result in a reduction of 20 to 30%. It is essential to compare these options across several insurers as pricing differences are significant.

Guaranteed annuities and protecting loved ones

Guaranteed annuities provide essential protection against the risk of premature death. By subscribing to a 10 or 15-year guarantee, you have assurance that the annuity will be paid for at least that duration, even if you die before the term. In that case, remaining payments are made to your designated beneficiaries. This option is particularly recommended for retirees who convert their capital early (before 65), as the risk of loss in the event of premature death is higher. The cost of this guarantee translates into an annuity reduction of about 3 to 8% depending on the chosen guarantee period.

Protection against inflation

Erosion of purchasing power is the major risk of a life annuity over the long term. An inflation rate of 2% per year reduces the purchasing power of your annuity by 33% in 20 years. To guard against this, some contracts offer annual indexation of the annuity to the consumer price index, or at a predetermined fixed rate (e.g., 1.5% per year). The cost of this protection is significant: the initial annuity is generally reduced by 15 to 25% compared to a non-indexed annuity. An alternative is to opt for increasing tiers (e.g., a 2% increase per year), offering a compromise between initial annuity and long-term protection. Evaluate this option carefully based on your life expectancy and your other indexed income sources (e.g., the basic state pension, which is revalued each year).