Lifetime annuity rates climbed to more than 7% in June following steady increases since the start of the year.

The Standard Life Annuity Rate Tracker found that that the average annuity rate for a healthy 65-year-old reached 7.08% in June.

Average rates have steadily increased by around 4% since January and 2.64% in March, the report said.

Compared to March rates, the June level added £3,659 and £4,059 to the total lifetime income expected for a healthy 65-year-old man and woman.

The average rate for a healthy 60-year-old improved from 6.16% in January to 6.38% in June.

For a healthy 70-year-old, the rate improved by 7.64% to 7.91% over the last six months.

The increases mean that annual income has improved by £127 a year for a healthy 60-year-old, £182 a year for a healthy 65-year-old and £123 a year for a 70-year-old.

According to the tracker, a healthy 65-year-old male who bought an annuity in June at a rate of 7.08% could expect a total lifetime income of £142,374. For a female of the same age, the expected income was £157,958.

A healthy 70-year-old who bought an annuity in June, could expect a rate of 7.91%. For a man, this would provide a total lifetime income of £125,835, while a woman could expect to receive £141,664.

Source: Standard Life

Pete Cowell, head of annuities at Standard Life, part of Phoenix Group, said: “It’s welcome to see that annuity rates have enjoyed a slow but steady improvement throughout the first six months of the year.

“While rate improvements are welcome news, the main benefit of an annuity is that it delivers income certainty in retirement, something which 92% of people say they want, according to Standard Life’s Retirement Voice study.”

The Tracker, developed by Standard Life, part of Phoenix Group, monitors current average 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.