Annuity rates surge to 10-year high

The Standard Life Annuity Rates Tracker found that average annuity rates reached 7.72% for a healthy 65-year-old in May 2025, the highest point in the past decade.

Rates have rebounded from their lowest levels, which were seen in July 2020, when they were just 4.71% – equating to a 64% increase.

The current rates also mark a significant improvement from May last year, when the average rate stood at approximately 7% – a 10.2% improvement. This means that a 65-year-old considering taking out an annuity could expect to receive an annual income of £7,720, based on a £100,000 pension pot.

Pete Cowell, head of annuities at Standard Life, said: “Our latest Annuity Rates Tracker shows annuity rates surged to their highest levels in years, offering retirees one of the strongest opportunities yet for securing a guaranteed income in retirement. This uplift has been driven by higher long-term interest rates.

“While the recent upward trend has been steady, it feels unlikely annuity rates will fall back to historic[al] lows. Interest in annuities is likely to remain strong, particularly given the anticipated changes to IHT in 2027, which may prompt more people to consider annuities as part of their retirement planning.”

The tracker, developed by Standard Life – which is part of Phoenix Group – monitors current average 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, as well as the total income possible from a fixed-term annuity.

According to the tracker, a healthy 65-year-old man who bought an annuity in May 2025 at a rate of 7.72% could expect a total lifetime income of £155,180. For a woman of the same age, the expected income was £172,940.

Meanwhile, a healthy 70-year-old who bought an annuity in June 2025 could expect a rate of 8.54%. For a man, this would provide a total lifetime income of £136,680, while a woman could expect to receive £153,770.

Purchasing an annuity earlier in retirement typically results in higher overall income. However, these rates tend to increase with age, meaning those who choose to buy an annuity later in retirement are likely to benefit from better rates.