State pensioners aged 65 and over can get up to £7,620 added to their state pension each year by purchasing an annuity, as rates remain elevated in 2026. Annuity rates ended last year at around 7.5% for a healthy 65-year-old, and strong levels have largely held into 2026, according to financial experts.
Annuity Rates Rise to 7.62%
In March 2026, annuity rates climbed to 7.62%, as reported by the Standard Life Annuity Rate Tracker. With long-term interest rates staying high, annuity pricing improved by 1.46% compared with the end of 2025. A healthy 65-year-old with a £100,000 pension pot could now expect an annual income of up to £7,620, translating to an additional £3,000 for a male and up to £4,000 for a female over their lifetime.
Key Considerations for Annuity Buyers
LV, a financial services provider, warns that pension annuities cannot be cashed in or surrendered at any time. “Purchasing a pension annuity is a once and for all decision. The options you select when you buy the annuity cannot be changed later on,” LV states. Annuity payments are classed as income and subject to income tax, and could affect any state benefits claimed. It is worth seeking advice from a financial professional to understand tax liabilities.
LV adds: “Depending on how long you live, you may receive less than you paid for your annuity. Ensure you outline any medical conditions you or your partner have as it may mean you receive a higher annuity income.”
Eligibility Requirements
To receive a pension annuity, individuals must be at least 55 years old and have at least £2,000 to invest after taking any tax-free cash. The annuity pays a lifetime income, providing financial security for retirees.
