Retirees across the UK are receiving a significant boost to their guaranteed income, with those holding £100,000 in savings now getting an extra £670 every year compared to just twelve months ago.
Annuity Rates Reach New Highs
This welcome increase is driven by a sharp rise in annuity returns. According to the latest data from the Standard Life Annuity Rates Tracker, average payouts climbed to 7.65% in September 2025. This marks a substantial jump from the 6.98% recorded in the same period a year earlier, representing an increase of almost 10%.
For a 65-year-old investing a £100,000 pension pot into an annuity today, this translates to an annual guaranteed income of approximately £7,650.
Expert Insight on Retirement Planning
Pete Cowell, Head of Annuities at Standard Life, commented on the positive trend. "Annuity rates remain strong and continue to offer valuable income certainty for retirees, following a slight dip since May," he stated.
Cowell highlighted a key benefit for consumers: "Notably, at today’s rates, a 65-year-old would need to live to 78 to break even—almost a decade earlier than during the rate lows."
He also pointed out that many could qualify for even better terms. "In addition, around half of customers could qualify for an enhanced annuity, unlocking even higher income and a shorter payback period."
Growing Demand for Financial Certainty
The strong performance of annuities aligns with what retirees say they want. Research from National Annuity Day revealed that over a third (35%) of UK adults over 50 desire a ‘steady and stable’ retirement income, while a further quarter (24%) want both a regular income and a reserve for bills.
This demand for predictability, combined with specific market conditions and regulatory factors, is expected to sustain interest in annuities. Cowell also mentioned that planned Inheritance Tax (IHT) changes in 2027 are prompting more people to consider annuities as a part of their long-term financial strategy.
Cowell emphasised the flexibility of modern annuity products. "It’s important to remember that annuities offer flexibility and can be tailored to suit different retirement needs. You don’t have to annuitise your entire pension pot," he explained.
For those seeking more control, he noted that fixed-term annuities provide a way to secure short-term income, offering both security for essential bills and an element of spending flexibility.
