Annuity rates have reached an 18-year high of 7.75%, according to the Standard Life Annuity Rate Tracker.
It showed that rates for a healthy 65-year-old rose 1.17% between April and July.
The rise means a healthy 65-year-old with a £100,000 pension pot could expect to receive up to £7,750 per annum, compared to £7,660 in April. That could work out to an extra £2,060 over the course of retirement.
Annuity rates – July 2026 | |||
| Annuity rate - July 2026 | Annuity rate - April 2026 | % change in rates |
60 | 7.06% | 6.95% | 1.58% |
65 | 7.75% | 7.66% | 1.17% |
70 | 8.43% | 8.38% | 0.60% |
Source: Standard Life Annuity Rate Tracker
Pete Cowell, head of annuities at Standard Life, said: “Annuity rates have reached the highest rates since August 2008, underlining just how much the retirement income landscape has shifted in recent years.”
He said that at today’s rates, the time it takes to receive back the 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.
According to the Tracker, a healthy 65-year-old male who bought an annuity in July 2026 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.
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.
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 – a difference of £1,370.
Total expected income – male | |||
| Total expected income – July 2026 | Total expected income – April 2026 | Total expected income difference |
60 | £173,000 | £170,000 | £3,000 |
65 | £156,000 | £155,000 | £1,000 |
70 | £135,000 | £134,000 | £1,000 |
Total expected income – female* | |||
| Total expected income – July 2026 | Total expected income – April 2026 | Total expected income difference |
60 | £194,000 | £191,000 | £3,000 |
65 | £177,000 | £175,000 | £2,000 |
70 | £155,000 | £154,000 | £1,000 |
*Total expected income figures are based on life expectancy statistics from the Office of National Statistics, based on age annuity is first purchased. Total expected income includes annuity income only and rounded to three significant figures. Source: Standard Life Annuity Rate Tracker
Mr Cowell said: “Trying to predict how the market might perform can be difficult and while rates have remained elevated over recent months, planning ahead is key.”