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What are the latest UK annuity rates?

Check the latest annuity rates UK providers are offering in April 2024.


 Written by Retirement Line Reviewed by Mark Ormston

Last Updated: 3rd April 2024

Jump to the current annuity rates table

Your guide to UK pension annuity rates

In our guide to annuity rates, we look at how they work, the rates available, and which factors will affect your own unique rate. We hope that this will help you when it comes to choosing an annuity provider.

You can also talk to one of our Annuity Specialists to find out what annuity rate and income level you could achieve from your pension savings. Please call 0800 652 1316 or request a call back. Alternatively, use our free annuity calculator for an indication of how much guaranteed income you could secure with an annuity.

What is on this page: 

✔️ Current annuity rates

✔️ What are annuity rates?

✔️ Use our interactive slider

✔️ What our customers say

✔️ Why is the annuity rate so important?

✔️ What affects annuity rates?

✔️ How have annuity rates changed?

✔️ Average annuity rates (2013 - 2023)

✔️ Does everyone get the same annuity rate?

✔️ What are guaranteed annuity rates?

✔️ What is the best annuity rate you can get?

What are the current annuity rates?

The table below shows the latest best annuity rates for conventional lifetime annuities. The figures are based on Retirement Line’s in-house quotation system that obtains quotes from the leading UK annuity providers.

The percentage annuity rate is easy to work out from the annual income figures in the table. For example, if £100,000 generates an annual income of £6,500, the annuity rate is 6.5%.

Rates can change daily and the best rate available to you may differ from the ones shown in the table, which do not take account of your health and lifestyle. Please contact us for quotes showing the best annuity rates currently available to you.

Best annuity rates (April 2024)

Annual income from £100,000 used to buy an annuity

   Annuity type

  Age 60

  Age 65

  Age 70

  Age 75

 

   Single life, level  

 

  £6,575.28  

  £7,343.52 

  £8,133.36  

  £9,403.20 

 

   Single life, escalating at 3%     

 

  £4,561.56 

  £5,179.32

  £5,991.96

  £7,649.52

 

   Single life, escalating at RPI 

       

  £3,922.44

  £4,557.36

  £5,427.60

  £7,066.92

 

  Joint life 50%

 

  £5,960.88 

  £6,655.68

  £7,350.36

  £8,575.56

 

  Joint life 100%

 

  £5,562.72

  £6,105.72

  £6,934.32

  £8,045.52

Click here for your free, no-obligation annuity quote

The percentage annuity rate is easy to work out from the annual income figures in the table. For example, if £100,000 generates an annual income of £6,500, the annuity rate is 6.5%.

Use our interactive slider to show how annuity rates and pension pot size affect the income you could receive:

How Annuity Rates Affect Your Income (Interactive Slider)

Pension Savings:

£

Annuity Rate:

%

Estimated Annual Annuity Income:

Note:

Information on current annuity rates UK providers offer, generated on 03/04/2024 by Retirement Line’s in-house annuity quote system. This gathers quotes in real time from the UK’s leading annuity providers. Figures in this table are based on conventional lifetime annuities, using a Peterborough postcode (PE7 8JG), with the payment frequency set to monthly in arrears. You may be eligible for more income with an enhanced annuity.

  • ‘Age’ refers to the person’s age when the annuity is set up.
  • ‘Single life, level’ is a plan where payments remain level for the duration of the annuity.
  • ‘Single life, escalating at 3%’ is where payments start at a lower level than a level plan, but increase at 3% each year.
  • ‘Single life, escalating at RPI’ is where payments start at a lower level than a level plan, but increase each year in line with the Retail Price Index.
  • ‘Joint life 50%’ is a joint life annuity paid on a level basis where, on death of the first life, the beneficiary would continue to receive 50% of the annuity payments for the rest of their life.
  • ‘Joint life 100%’ is a joint life annuity paid on a level basis where, on death of the first life, the beneficiary would continue to receive 100% of the annuity payments for the rest of their life.
  • For both joint life examples, figures shown are based on the first life being male, and the beneficiary being a female of the same age.

What Our Customers Say

 Mike Worrall

What are annuity rates?

Annuity rates are an important factor in determining the level of income you will receive when purchasing an annuity with your pension savings.

Working out the effect of the rate is quite simple. The higher annuity rate you secure, the more income you will receive. For example, if you were buying a lifetime annuity with a pension fund of £100,000 and were offered an annuity rate of 5%, the annual income you receive would be £5,000. 

Annuity rates differ from provider to provider, and providers will offer you a personalised rate based on a number of factors including underlying economic factors, your age, and your health and lifestyle for lifetime annuities. 

With a lifetime annuity, generally the rate and income you are offered when taking out the annuity will never change. This gives you certainty and reassurance about your long-term retirement income.

However, you could have an escalating lifetime annuity. This is where you can choose to start your payments at a lower level, and they will then increase at a fixed percentage or in line with the Retail Price Index. But here too, the payments you receive will be based on the annuity rate that’s set when the annuity begins. With both of these options, once your annuity is set up, it cannot normally be changed.

If you choose a fixed-term annuity, the rate remains the same until the end of the chosen term. However, you can arrange for your regular payments to be increased in line with the Retail Price Index, as above. Your annuity will generally remain the same once set up, but for a temporary period - the term of your annuity - rather than the rest of your life. 

You can buy an annuity with money you have saved in a ‘defined contribution’ personal pension or company pension scheme.

Why is the annuity rate so important?

You commit to your rate when taking out an annuity, so it is important to exercise your Open Market Option. This is your right to get quotes from a number of annuity providers. By shopping around like this, you will be able to find the best annuity rate and income currently available to you.

It may surprise you to learn that annuity rates can vary significantly from provider-to-provider. In fact, at Retirement Line we have found a difference of as much as 15% between the lowest and highest rates available on the annuity market.

Retirement Line specialises in providing you a comparison of the best annuity rates from leading providers. You may also potentially benefit from preferential annuity rates we secure as the UK's largest pension annuity broker*.

What influences pension annuity rates?

Annuity providers typically buy government bonds (also known as gilts) to fund their clients’ annuities. The government pays a type of interest known as the gilt yield to the annuity provider. This in turn funds the regular income payments they make to their annuity clients.

Providers fund their annuities with these bonds/gilts because they are among the safest types of investment. This is important when funding guaranteed incomes for their annuity clients. 

The gilt yield is linked to the Bank of England’s Bank Rate, also known as the ‘base rate’ or ‘interest rate’. When the Bank Rate is low, gilt yields are also low, and this is reflected in the pension annuity rate. On the other hand, when the Bank Rate is high, gilt yields and typical annuity rates also tend to rise.

However, gilt yields don’t always directly follow the Bank Rate. Also, annuity providers use additional economic and commercial factors to determine their annuity rates. This is why annuity rates can rise or fall regardless of what happens to the Bank Rate or gilt yields.

The important thing to remember is that annuity rates can change frequently. They also typically differ from provider-to-provider. Shopping around for the best UK annuity rate is therefore essential if you are to maximise your income from an annuity.

How have providers’ typical annuity rates changed?

The Bank Rate was relatively stable from early 2009 to late 2021, hovering at 0.5% before fluctuating somewhat, but still not rising above 1%. Things changed however, and the rate rose from early 2022 until it had reached 5.25% by October 2023. 

This historic increase in the Bank Rate was echoed by increases to the annuity rates offered by the UK’s annuity providers. This was of course good news to people who were ready to turn their pension pot into a guaranteed income.

For example, in October 2022, Canada Life reported that typical annuity rates had hit a 14-year high – increasing by 52% in the previous nine months alone. Rates did fall slightly from this historical high in the following months, but rose again through much of 2023.

Click here for your free, no-obligation annuity quote

Average annuity rates (2013 - 2023)

Sometimes a picture is worth a thousand words. The graph below illustrates very clearly just how significant the recent increase in the annuity rate has been.

 

Average annuity rate achieved by Retirement Line customers between 2013 and 2023

Note: Average rates generated in September 2023 by Retirement Line’s in-house annuity quote system, based on annuities we have arranged for clients from the UK’s leading annuity providers. Results are based on 65-year-old males buying level, single life, lifetime annuities with an average pension fund of £100,000. Please remember that these are average rates:  they may not represent the rate you would receive and we recommend you ask us for a personal quote based on your circumstances and requirements.

Does everyone get the same annuity rate?

When you get annuity quotes, you’ll find that each provider will offer you a unique and personalised annuity rate. The actual rate they offer you could vary considerably from person-to-person and provider-to-provider.

This is because providers won’t just base your rate on your age and pension fund size. They will instead base it on your individual personal circumstances and the type of annuity you wish to take.

Here is a breakdown of the individual factors that could influence your own unique annuity rate:

what influences annuity rates

This information is for illustrative purposes only.

The annuity provider’s current base rates

As we have described above, your annuity provider will base their annuity rate on economic and commercial factors, including current UK gilt yields. 

Whether you shop around

You don’t have to accept the annuity rates offered to you by your pension scheme provider. You have the right to use your pension savings to buy an annuity with a more competitive annuity provider on the open market. 

Unfortunately, a report by the Pensions Policy Institute co-sponsored by Retirement Line found that: “Only 56% of people use advice and guidance when accessing their pension pots.” As the advice/guidance process will typically involve obtaining quotes from a number of annuity providers, this suggests that the other 44% may be missing out on higher income by not shopping around. 

This finding is backed up by Canada Life research reported in Money Marketing, which found that not shopping around costs annuity customers £385 a year on average. That adds up to an average £7,700 over a 20-year retirement. 

Meanwhile, according to Which?, shopping around for an annuity ‘can increase your retirement income by up to 20%’. 

Retirement Line specialises in shopping around the UK’s leading annuity providers on your behalf as part of our comprehensive annuity service.  

Mr Cartwright

The size of your pension pot

It doesn’t make a huge difference, but an annuity rate might be partly based on how much of your pension savings you use to buy the annuity. The more you use to buy your annuity, generally the higher the rate in some circumstances.

Your age

Life expectancy is central to the annuity rate you are offered. Annuity providers set a rate that spreads your total annuity income across the number of years they would expect you to live.

This is why your age will be an important factor. The older you are, the higher the annuity rate you can expect, and the higher your regular income payments will be.

Where you live

Annuity providers use your postcode to help calculate life expectancy. If you live in an area with a lower-than-average life expectancy, you may be offered a slightly higher rate.

Your health and lifestyle

In other financial matters you rarely benefit by having a past or current medical condition, or making lifestyle choices such as smoking. But when it comes to annuities, you may find that you qualify for a better annuity rate and more income in these circumstances.

Lifetime annuity providers offer enhanced annuities with higher annuity rates that pay out more income. They are offered to people who the provider expects will have a lower life expectancy on account of their health and lifestyle. 

Even being a moderate smoker, being slightly overweight or taking prescription medication that controls a medical condition could mean you qualify for additional income. 

The annuity options you choose 

You have a number of options when it comes to buying an annuity, and some of them may influence the annuity rate and income you are offered.

For example, one option is to take an increasing annuity. This is where the payments you receive increase each year, unlike a standard annuity that pays the same level of income each year, as long as you live. 

The increase could be linked to inflation as measured through the Retail Price Index (RPI) or fixed at an agreed rate each year. Your annuity rate will be lower, as will the income you receive initially, but the income will increase each year in accordance with your choice. 

Another option is to choose either a single life or joint life annuity. Choosing a joint life annuity will provide an income for a spouse or beneficiary should you pass away. 

This will reduce the annuity rate you are offered, and the size of your regular income payments. However, it will potentially extend the length of time that your annuity provider pays an income.

Another option is a guarantee period. This is another form of death benefit, which provides a guaranteed income to a beneficiary should you pass away within a set period after setting up your annuity. This will also reduce the annuity rate and size of income payment, in return for the potential value of the guarantee period.

Access to preferential rates

Retirement Line may be able to secure preferential annuity rates for you. This is thanks to our position as the UK’s number one annuity broker* and our close relationships with the UK’s leading annuity providers. 

      Factors that can affect your individual annuity rate      

 

    1 

 

 The annuity provider’s annuity rates

 

    2 

 

 Whether you shop around

 

    3

 

 The size of your pension pot

 

    4

 

 Your age

 

    5

 

 Where you live

 

    6

 

 Your health and lifestyle

 

    7

 

 Your chosen annuity options

 

   8

 

 Access to preferential rates

What are guaranteed annuity rates?

Sometimes the pension scheme you have been saving into will offer you what’s known as a guaranteed annuity rate. This guarantees a return at a certain percentage if you take an annuity with the existing pension scheme.

The guaranteed annuity rate could be higher than the best rate currently available from other annuity providers. This is perhaps most likely to be the case if you started paying into the scheme normally before July 1988. The guaranteed annuity rate set in pension schemes’ terms and conditions were often higher than today’s best UK annuity rates.

Even so, our Annuity Specialists will be happy to look into whether another provider can offer you a better deal than your pension scheme’s guaranteed annuity rate. You have nothing to lose by asking us for this no-obligation service; if we find that your pension scheme’s guaranteed annuity rate can’t be beaten on the open market, we’ll tell you. 

What is the best annuity rate you can get?

As we have explained above, annuity providers will personalise your best annuity rate to your individual circumstances. That’s why we invite you to talk to one of our Annuity Specialists so that they can get you personalised quotes from the UK’s leading annuity providers.

For a free, no-obligation annuity quote, you can call us on 0800 652 1316, request a call backor email us at info@retirementline.co.uk

Click here for your free, no-obligation annuity quote

Call now and talk to an Annuity Specialist about how we can boost your annuity income in retirement

0800 652 1316



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