Annuity rates rise to their highest level in 18 years

The latest Standard Life Annuity Rate Tracker shows that the average annuity rate for a healthy 65-year-old increased from 7.66% in April to 7.75% in July 2026.

This is the highest level recorded by the tracker since August 2008 and highlights how much the retirement income market has changed in recent years.

For someone aged 65 with a £100,000 pension, an average rate of 7.75% could provide an annual income of around £7,750. The actual income available will depend on your circumstances, the type of annuity you choose and the provider.

The best annuity rates can be even higher

What we should remember here is that the 7.75% figure is an average, so it doesn't necessarily represent the highest income available.

On 1 August 2026, the best annuity rate through Retirement Line for a healthy 65-year-old buying a single life annuity with £100,000 was 8.36% from Scottish Widows. This would provide an annual income of £8,360.28.

At 8.36%, you would receive around £100,000 in income over roughly 12 years (known as your payback period). So, if you bought a lifetime annuity at 65 and lived beyond 77, your income would have exceeded the £100,000 originally used to buy it, with payments continuing for the rest of your life.

That's why shopping around is so important when buying an annuity. Rates can vary significantly between providers, and simply accepting the quote offered by your existing pension provider could mean missing out on a higher income.

It's also worth remembering that the rate you can secure will depend on factors such as your age, health, pension fund and the type of annuity you choose. Adding features such as a death benefit to pay income to someone after you pass away or inflation-linked increases can also affect the income you receive.

Why are annuity rates so high?

Annuity rates are influenced by a number of economic factors, including gilt yields (bond yields) and interest rates. The higher yields available on government bonds in recent years have had an especially positive impact on annuity rates.

While rates have moved around, they have remained at relatively high levels, making annuities an increasingly attractive option for people looking for certainty from their pension income.

Mark Ormston, Chief Compliance Officer at Retirement Line says:

“Annuities are looking increasingly attractive for people who want certainty from their retirement income, particularly with rates still at such strong levels. We’re seeing a very different annuity market from a few years ago, and that means it’s worth revisiting the option even if you previously decided an annuity wasn’t for you.

“The important thing is not to get too caught up in trying to predict where rates will go next. Rates can move quickly, and there’s no guarantee that today’s rates will still be available when you’re ready to buy. Instead, focus on what income you need, understand the options available to you and make sure you shop around before making a decision.”

Could an annuity be right for you?

Transitioning into retirement without a set income to live on each year can be unsettling. An annuity enables you to turn all or some of your pension savings into a guaranteed income. It gives you certainty over how much you'll receive for the rest of your life, or for a set number of years.

Once you arrange your annuity, you generally can't change your mind or access the money you've used to purchase it. That's why it's important to speak to an annuity specialist, understand your options and be sure of your decision.

The friendly team at Retirement Line are here to compare products and rates from the UK’s leading providers to help you find an option that suits your needs.

If you’re looking to explore your annuity options, call us today on 0800 652 1316 or request a call back.