Annuity rates hit 7.75% as retirement incomes reach 18-year high

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Annuity rates rose in July 2026, with the average rate for a healthy 65-year-old reaching 7.75%, up from 7.66% in April. Annuity rates have remained resilient over the past year and have hit their highest levels since pension freedoms were introduced.

A healthy 65-year-old with a £100,000 pension pot could now expect an annual income of up to £7,750, compared to £7,660 in April 2026. This could translate to an additional £2,060 over the course of retirement.

Annuity rates – July 2026
	Annuity rate - July 2026	Annuity rate - April 2026	% change in rates
60	7.06%	6.95%	1.58%
65	7.75%	7.66%	1.17%
70	8.43%	8.38%	0.60%

At today’s rates, the time it takes to receive back the initial investment has significantly shortened. The payback period for a £100,000 annuity purchase with a rate of around 5% in 2020 would have taken around 20 years to repay. However, with today’s rates closer to 7.75%, that falls to around 13 years, depending on individual circumstances.

About the Annuity Rate Tracker

We developed the Tracker to monitor current 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.

Total lifetime income*

According to the Tracker, a healthy 65-year-old male who bought an annuity in July 2026 at a rate of 7.75% could expect a total lifetime income of £156,000. For a female of the same age, the expected income was £177,000.

Meanwhile, a healthy 70-year-old who bought an annuity during the same period could expect a rate of 8.43%. For a man, this would provide a total lifetime income of £135,000 while a woman could expect to receive £155,000.

Total expected income – male
	Total expected income – July 2026	Total expected income – April 2026	Total expected income difference
60	£173,000	£170,000	£3,000
65	£156,000	£155,000	£1,000
70	£135,000	£134,000	£1,000

Total expected income – female
	Total expected income – July 2026	Total expected income – April 2026	Total expected income difference
60	£194,000	£191,000	£3,000
65	£177,000	£175,000	£2,000
70	£155,000	£154,000	£1,000

^{*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 and rounded to three significant figures.}

Improving rates with age

While buying an annuity earlier in retirement can lead to a higher total income over time, annuity rates generally improve with age. This means that those who delay purchasing an annuity may benefit from more favourable rates later in retirement.

As of July 2026, rates for a healthy 60-year-old were 7.06% compared to 8.43% for a healthy 70-year-old. This results in an annual income of £7,060 for a 60-year-old versus the £8,430 a healthy 70-year-old may expect to receive on a £100,000 pension pot – a difference of £1,370.

Trying to predict how the market might perform can be difficult and while rates have remained elevated over recent months, planning ahead is key. For many, having some form of guaranteed income in place can provide a critical foundation for covering core living costs, with more flexible options like drawdown used alongside it to help balance certainty with flexibility.

To discover our full range of retirement income solutions and see how we can help you support your clients, please visit our website. 

Sources:

Annuity rates data provided by AMS Retirement. Accurate as of July 2026.