Annuity rates ‘hold steady’ despite interest rate cuts

14 November 2024

Despite recent interest rate cuts by the Bank of England, annuity rates continue to ‘hold steady’. This is good news for pension savers looking for guaranteed income from their pension pot.

Reporting for Money Week on 12 November, Ruth Emery provides some data on annuity rates from financial services company Hargreaves Lansdown.

Their data shows that an ‘average 65-year-old with a £100,000 pension pot’ can get up to £7,499 annual income. That is on the basis of a single-life level annuity with a five-year guarantee period (a form of annuity death benefit). By comparison, income on the same basis was at £7,104 three months ago and £7,133 in November 2023.

Please note that this data is illustrative, and that annuity quotes will be generated on an individual basis. A person’s health, lifestyle, occupation and even their postcode will affect the unique annuity rate they can access. 

Why haven’t annuity rates fallen with interest rates? 

There is a link between interest rates and annuity rates, which is why a fall in the annuity rate may have been expected following recent interest rate cuts. The Bank of England cut interest rates from 5.25% to 5% on 1 August and again to 4.75% on 7 November.

However, annuity rates are also strongly influenced by gilt yields, and these don’t always follow changes in interest rates. In addition, other economic and commercial factors affect annuity rates offered by the UK’s annuity providers. 

Please see our annuity rates page for regular updates on the latest rates, and more information about how rates work.