Annuity rates surge above 7.7% - highest point of the decade

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• The Standard Life Annuity Rates Tracker reveals that average annuity rates reached 7.72% in May 2025
• Rates mark a 10% year on year improvement, highlighting upward trend of annuity rates
• A healthy 65-year old with a £100,000 pension pot could expect to receive approximately £7,720 per annum

Annuity rates rebounded from their lowest levels, previously seen in 2020, and have reached 7.72% for a healthy 65-year-old, according to the Standard Life Annuity Rates Tracker¹.

This marks a significant recovery from July 2020 when rates were just 4.71%, reflecting a 64% increase.

This also marks a significant improvement from May last year, when the average annuity rate stood at approximately 7.00, 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.

Annuity rates – May 2025
	Average annuity rate (May 2025)	Average annuity rate (May 2024)	% change in rates
60	7.01%	6.32%	10.96%
65	7.72%	7.00%	10.21%
70	8.54%	7.82%	9.20%

Pete Cowell, Head of Annuities at Standard Life, part of Phoenix Group, 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 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.”

About the Annuity Rates Tracker

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, as well as the total income possible from a fixed-term annuity.

Total lifetime income*

According to the Tracker, a healthy 65-year-old male who bought an annuity in May 2025 at a rate of 7.72% could expect a total lifetime income of £155,180. For a female 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.

Total expected income: May 2025 – male
	Total expected income (May 2025)	Total expected income (May 2024)	Total expected income difference
60	£172,540	£154,860	£17,680
65	£155,180	£140,800	£14,380
70	£136,680	£124,390	£12,300

Total expected income: May 2025 – female*
	Total expected income (May 2025)	Total expected income (May 2024)	Total expected income difference
60	£190,080	£170,670	£19,410
65	£172,940	£156,210	£16,730
70	£153,770	£140,030	£13,740

^{*Total expected income figures are based on life expectancy statistics from the Office of National Statistics, based on age annuity is first purchased. Total expected income includes annuity income only.}

Improving rates with age

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

As of May 2025, rates for a healthy 60-year-old were 7.01% compared to 8.54% for a healthy 70-year-old. This results in an annual income of £7,010 for a 60-year-old versus the £8,540 a healthy 70-year-old may expect to receive on a £100,000 pension pot – a difference of £1,530.

Pete continued, “For those who want to lock in an income for retirement and ensure essential needs are covered, but still want an element of flexibility, it is helpful to remember that annuities can be used alongside other decumulation strategies. One way is by keeping some savings in drawdown or by staggering the purchase of annuities to benefit from higher rates as you age. This offers the best of both worlds: the certainty and security of a guaranteed income, with the flexibility to respond to changing needs throughout retirement.”

ENDS

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[1] Annuity rates data provided by AMS Retirement and are a sample of healthy model points based on 15 different postcodes. Accurate as of May 2025.

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Notes to editors

• Standard Life is a brand that has been trusted to look after peoples’ life savings for 200 years.
• Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.
• Standard Life is part of Phoenix Group, one of the UK’s largest long-term savings and retirement businesses. We’re proud to be building on 200 years of Standard Life heritage together.
• Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs and plan a future they feel confident about.
• The value of investments can go down as well as up and may be worth less than originally invested.