1. What Are Annuity Rates – and Why Should You Care?

If you’ve built up a pension pot and are thinking about turning it into a guaranteed income for life, you might be considering an annuity.
An annuity is a product you buy from a pension provider or insurer. In exchange for part or all of your pension pot, you get a regular, fixed income – usually for the rest of your life.

The annuity rate is the percentage of your pension pot that the provider will pay you each year as income.
For example:

• If you have a £100,000 pension pot and the rate is 7%, you’d get £7,000 a year before tax.

Why annuity rates matter:

• Direct impact on your retirement income – a higher rate means more money in your pocket every year.
• Rates vary between providers – the difference between the highest and lowest offers could add up to thousands over your lifetime.
• Health and lifestyle can increase rates – conditions like high blood pressure or diabetes can lead to an “enhanced annuity” that pays more.
• Rates can change quickly – they’re linked to interest rates and gilt yields, so timing your purchase can make a big difference.

2. Pension Potential: What They’re Reporting

Pension Potential, one of the UK’s leading annuity brokers, reports that as of 30 March 2025:

• A healthy 65-year-old with a £100,000 pot could expect £7,000–£7,425 per year.
• Enhanced annuities could increase this by 8% to 20%, depending on health and lifestyle.

These numbers provide a useful starting point for comparison.

3. Current Market Rates Across the UK

Standard Life (May 2025)

• Average rate for a 65-year-old: 7.72% (~£7,720 per £100k pot).
• By age:
  • 60: ~7.01% * 70: ~8.54%

Canada Life

• Annuity rates are at their highest in 16 years (exact figures vary by case).

Legal & General (June 2025)

• Healthy, single-life rate for £100,000 at age 65: ~£7,477 p.a.
• Smoker: ~£7,825 p.a.
• Inflation-linked (RPI): ~£4,574 p.a.

Retirement Line (1 August 2025)

• Best single-life rate: 7.91% (~£7,906 p.a., Legal & General).
• Joint life (50%): 7.53% (~£7,529 p.a., Scottish Widows).
• Joint life (100%): 6.98% (~£6,978 p.a., Canada Life).

Which? (August 2025)

• Healthy single-life: ~£7,857 p.a. (Canada Life).
• Joint-life (50%): ~£7,514 p.a.
• Joint-life with 3% escalation: ~£5,293 p.a.

4. Why Rates Are So High Right Now

• Interest rate increases and rising gilt yields have pushed annuity rates to their highest level in over a decade.
• According to multiple providers, this upward trend is expected to continue in the short term.

5. Tips for Getting the Best Annuity Rate

1. Shop around using the Open Market Option (OMO) – don’t just accept your current pension provider’s offer.
2. Check eligibility for an enhanced annuity – health issues or lifestyle factors can boost income.
3. Look for Guaranteed Annuity Rates (GARs) – older pension plans may have fixed, often higher rates.
4. Compare different annuity types – level vs. inflation-linked, single vs. joint-life.
5. Time your purchase – rates can change daily.
6. Get professional advice – especially if your situation is complex.

6. Summary Table:

65-Year-Old, £100,000 Pot (Single Life)Provider / Source Rate (%) Annual Income Pension Potential (Mar 2025) 7.00–7.43 £7,000–£7,425 Standard Life (May 2025) 7.72 £7,720 Legal & General (Aug 2025 best) 7.91 £7,906 Which? (Aug 2025, Canada Life) – £7,857 Inflation-linked average 3–5 ~£4,600

Annuity rates are one of the most important things to consider when deciding how much income you’ll get in retirement.
Right now, UK rates are at their highest in over a decade – so it’s a good time to shop around.
But buying an annuity is usually irreversible, so make sure you shop around and get professional help before you commit.

Disclaimer: This article is for information purposes only and does not constitute financial advice. Annuity rates change daily and are based on individual circumstances. Always speak to a company that is authorised and regulated by the Financial Conduct Authority (FCA) before making any financial decisions.