Annuity rates for a healthy 65 year old have increased by around 8 per cent over the past 12 months, according to the Standard Life Annuity Rates Tracker.

This corresponded to an increase of £11,020 and £12,960 to the total lifetime income expected for a 65 year old man and women purchasing an annuity respectively.

The improvement means that a healthy 65 year old could expect to receive an annual income of £7,360, based on a £100,000 pension pot, an increase of £550 compared to January last year.

According to Standard Life’s tracker, a healthy 65 year old man who purchased an annuity in January 2025 at a rate of 7.36 per cent could expect a total lifetime income of £147,940, while a woman in the same cohort could expect an income of £164,860.

Meanwhile, a healthy 70 year old who bought an annuity in January 2025 could expect a rate of 8.21 per cent, resulting in a total lifetime income of £131,350 for a man and £147,770 for a woman.

As at January 2025, the rates for a fixed-term annuity were 21.91 per cent over a five-year term, 12.33 per cent over a 10-year term, and 9.18 per cent over a 15-year term.

“Our latest Annuity Rates Tracker shows that annuity rates have continued to improve over the last 12 months and continue to offer retirees even stronger total incomes,” commented Standard Life head of annuities, Pete Cowell.

“Almost all (98 per cent) people consider income security as an important factor when deciding what to do with their pension pot, and a similar amount (95 pe cent) prioritise certainty of income so it’s easy to understand why annuities are an increasingly popular choice.

“Providing peace of mind through a regular guaranteed income, the growing appeal of annuities is clear in the latest sales figures published by the Association of British Insurers – increasing by 34 per cent in a year.

“Looking ahead, we expect annuity rates, as well as the demand for these types of products, to remain strong, especially with pensions being brought into scope for inheritance tax from 2027.

“Wealthier savers may be encouraged to access more of their pensions, with annuities becoming an increasingly attractive way of doing so.

“It's also encouraging to see growing industry and adviser recognition on the flexible ways a guaranteed income can be incorporated into a broader decumulation strategy, using annuity products and options to create more tailored retirement journeys that meet specific needs in retirement.”

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