Pensioners with £100,000 in retirement savings can now enjoy around £670 more a year in guaranteed income than they could 12 months ago, thanks to a sharp rise in annuity returns.
According to the Standard Life Annuity Rates Tracker, average payouts reached 7.65 per cent in September 2025, up from 6.98 per cent a year earlier, an increase of almost 10 per cent.
That means a healthy 65-year-old who invests £100,000 into an annuity today would receive about £7,650 a year in guaranteed income.
Standard Life says the extra £670 a year is roughly equivalent to the cost of a weekend break for two in the UK, offering retirees a little more breathing room in their budgets.
The surge in returns marks a major shift in retirement planning, making annuities far more appealing for those wanting a guaranteed income for life.
At current levels, pensioners can now recover their original investment in around 13 years, meaning a 65-year-old only needs to live to 78 to start receiving more than they paid in. That’s nearly a decade sooner than during periods when rates were at their lowest.
According to the Standard Life Annuity Rates Tracker, a healthy 65-year-old man with a £100,000 pension pot could expect total payments of around £154,000 over his lifetime, while a woman of the same age could receive roughly £171,000.
The difference reflects women’s longer average lifespan, resulting in more years of guaranteed income from the same initial investment.
Retirees with £100,000 pension pot can get an extra £670 a year as returns hit 10-year high
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GETTYOverall, the improved market conditions mean retirees are getting significantly better value for their savings. Standard Life’s data shows a healthy 65-year-old man would receive about £14,000 more over his lifetime compared to a year ago.
Women of the same age benefit even more, seeing their total expected income rise by around £15,000 due to their longer life expectancy.
For younger retirees, the gains are more pronounced – a 60-year-old man could see lifetime income increase by £16,000, whilst women at 60 might gain £19,000 compared to September 2024 figures.
Older purchasers also benefit, though to a lesser degree, with 70-year-old men receiving £10,000 more and women £11,000 more in total lifetime income.
Women of the same age benefit even more, seeing their total expected income rise by around £15,000 due to their longer life expectancy
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GETTYThe tracker shows rates improve with age, reaching 8.38 per cent for 70-year-olds, though earlier purchases typically yield higher total returns due to longer payment periods.
Pete Cowell, Head of Annuities at Standard Life, said: “Annuity rates remain strong and continue to offer valuable income certainty for retirees, following a slight dip since May.
“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. In addition, around half of customers could qualify for an enhanced annuity, unlocking even higher income and a shorter payback period.”
Research indicates that 35 per cent of UK adults over 50 desire stable retirement income
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GETTYResearch indicates that 35 per cent of UK adults over 50 desire stable retirement income, whilst 24 per cent want both regular payments and reserves for unexpected costs.
Mr Cowell continued: “It’s important to remember that annuities offer flexibility and can be tailored to suit different retirement needs. While some people might prefer the certainty of a lifetime annuity, others might choose to keep part of their savings in reserve, and you don’t have to annuitise your entire pension pot.
“Meanwhile, for those who want to adjust their spending more regularly, a fixed-term annuity can provide a way to secure income over the short term, giving retirees the security of knowing their bills will be met while providing an element of flexibility.”
Mr Cowell noted that planned inheritance tax changes in 2027 are encouraging more people to explore annuities as part of their retirement strategy.
