pension savings<\/a> could secure an annual income of \u00a37,795, up from \u00a37,146 in January.<\/p>\nThe reason that annuities are getting more generous is partly because gilt yields \u2013 the return an investor receives for buying government debt \u2013 rose earlier in 2025, and the two are heavily correlated because of how pension providers tend to invest.<\/p>\n
Experts say we are now in a \u201cbuyer\u2019s market\u201d for annuities, with plenty of competition between providers.<\/p>\n
But polling suggests a lot of people are not actively comparing rates and are purchasing from their existing pension provider.<\/p>\n
Doing so could mean missing out on hundreds of pounds every year in retirement.<\/p>\n
What is an annuity and how are they calculated?<\/p>\n
Most pension savers with defined contribution (DC) pensions \u2013 the most common type \u2013 put money into a pot every month during their working life and invest the money for their retirement.<\/p>\n
When they reach the point that they can access their pension they can pull money from their pot via drawdown while keeping the money invested, or they can buy a fixed income for life \u2013 an annuity.<\/p>\n
Some people prefer annuities to drawdown because they offer security, in the form of guaranteed income, but it\u2019s common to use a mixture of the two.<\/p>\n
Annuity rates in years gone by have been very poor, but they have risen again in the past three years.<\/p>\n
The amount you will get depends on multiple factors, including the size of your pension pot, your age, and your health, as the firm selling you one is essentially weighing up how long you will live, and how many years it will have to keep paying you your annuity.<\/p>\n
Are rates the best for everyone?<\/p>\n
What sort of income you will get for your pension pot depends on your individual circumstances.<\/p>\n
But Canada Life says for a single life annuity policy with a \u00a3100,000 purchase price with no lifestyle conditions, rates are the best for 16 years for those aged 60, 65 and 70.<\/p>\n
Nick Flynn, the organisations\u2019 retirement director, said: \u201cThe good news is that we\u2019re currently in a buyer\u2019s market, with annuity rates at their highest since 2009 \u2013 making it an ideal time for prospective retirees to consider their options, potentially securing greater value from their pension savings.\u201d<\/p>\n
How to avoid missing out on the best deals<\/strong><\/p>\nAnalysis of the latest FCA Financial Lives Survey data suggests that a third (33 per cent) of adults aged 50-plus who bought an annuity in the last four years had not compared the products and prices of two or more providers before purchasing their annuity.<\/p>\n
More than one third (35 per cent) of the same group said that they had purchased from the same provider they saved for their pension with and a further 12 per cent were unsure if they had done so.<\/p>\n
Analysis by multiple retirement organisations suggest the gap between the best and worst annuity rates is widening, and buyers could miss out on \u00a3400 or more a year if they do not shop around.<\/p>\n
Stephen Lowe, group communications director at Just Group, said: \u201cThere are still too many \u2018zombie buyers\u2019 who are not shopping around to get the best annuity deals available. Over the course of an entire retirement, a saver failing to shop around could be missing out on thousands of pounds of extra income \u2013 the closest thing in the financial world to being given \u2018free money\u2019.<\/p>\n
\u201cAnyone considering purchasing an annuity should shop around the open market and ensure they disclose information on health and lifestyle factors to make sure they get a personalised rate \u2013 all of which will help them secure the best rate on offer to them.\u201d<\/p>\n
Steve Butler, managing director at Pension Potential, added: \u201cAnnuities provide peace of mind with a guaranteed income for life or a set term, taking away the stress of managing your money in retirement.<\/p>\n
\u201cBut the gap between the best and worst rates can be as much as 15 per cent, and up to 80 per cent if you qualify for an enhanced annuity. That could mean missing out on tens of thousands of pounds in income over your lifetime.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Picking the wrong pension annuity could end up costing you \u00a3400 or more a year in your retirement…\n","protected":false},"author":2,"featured_media":159893,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,474,1232,6318,617,2499,2250,16,15],"class_list":{"0":"post-159892","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-money","11":"tag-pension-annuity","12":"tag-pensions","13":"tag-personal-finance","14":"tag-retirement","15":"tag-uk","16":"tag-united-kingdom"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/159892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=159892"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/159892\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/159893"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=159892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=159892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=159892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}