Annuity rates hit 7.75 per cent in July 2026, the highest level in 18 years, according to the Standard Life Annuity Rate Tracker.

It found that the average annuity rate for a healthy 65 year old increased from 7.66 per cent in April to 7.75 per cent in July.

Standard Life noted that annuity rates had remained resilient over the past year and had reached their highest levels since pension freedoms were introduced.

A healthy 65 year old with a £100,000 pension could now expect an annual income of up to £7,750, up from £7,660 in April, potentially resulting in an additional £2,060 over the course of retirement.

According to the tracker, a healthy 65 year old male who bought an annuity in July 2026 at a rate of 7.75 per cent could expect a total lifetime income of £156,000, while a healthy woman the same age could expect an income of £177,000.

“Annuity rates have reached 7.75 per cent, the highest rates since August 2008, underlining just how much the retirement income landscape has shifted in recent years,” said Standard Life head of annuities, Pete Cowell.

“At today’s rates, the time it takes to receive back your initial investment has significantly shortened.

“The payback period for a £100,000 annuity purchase with a rate of around 5 per cent in 2020 would have taken around 20 years to repay.

“However, with today’s rates closer to 7.75 per cent, that falls to around 13 years, depending on individual circumstances.

“Trying to predict how the market might perform can be difficult and while rates have remained elevated over recent months, planning ahead is key.”

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