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 Tracker.
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.”
