Annuity rates have reached an 18-year high, according to the Standard Life Annuity Rate Tracker.
The average rate for a healthy 65-year-old reached 7.75% in July 2026, up from 7.66% in April.
A healthy 65-year-old with a £100,000 pension pot could now expect an annual income of up to £7,750, compared to £7,660 in April. This could translate to an additional £2,060 over the course of retirement.
Standard Life’s Tracker monitors current annuity rates across the market for those annuitising at ages 60, 65 and 70. It also shows the total lifetime income from an annuity and the extent to which annuity rates improve with age.
It found that a healthy 65-year-old male who bought an annuity in July at a rate of 7.75% could expect a total lifetime income of £156,000. For a female of the same age, the expected income was £177,000.
Meanwhile, a healthy 70-year-old who bought an annuity during the same period could expect a rate of 8.43%. For a man, this would provide a total lifetime income of £135,000, while a woman could expect to receive £155,000.
Pete Cowell, head of annuities at Standard Life, said: “Annuity rates have reached 7.75%, the highest rates since August 2008, underlining just how much the retirement income landscape has shifted in recent years.
“At today’s rates, the time it takes to receive back your initial investment has significantly shortened. The payback period for a £100,000 annuity purchase with a rate of around 5% in 2020 would have taken around 20 years to repay. However, with today’s rates closer to 7.75%, that falls to around 13 years, depending on individual circumstances.”
While buying an annuity earlier in retirement can lead to a higher total income over time, annuity rates generally improve with age. This means that those who delay purchasing an annuity may benefit from more favourable rates later in retirement, the firm said.
As of July 2026, rates for a healthy 60-year-old were 7.06% compared to 8.43% for a healthy 70-year-old. This results in an annual income of £7,060 for a 60-year-old versus the £8,430 a healthy 70-year-old may expect to receive on a £100,000 pension pot.
Cowell added: “Trying to predict how the market might perform can be difficult and while rates have remained elevated over recent months, planning ahead is key. For many, having some form of guaranteed income in place can provide a critical foundation for covering core living costs, with more flexible options like drawdown used alongside it to help balance certainty with flexibility.”
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