Marvin OnumonuAnnuity payback period has dropped to 13 years as rates rose by nearly 10% since 2024, according to the Standard Life Annuity Rates Tracker.
The average annuity rate in September 2025 reached 7.65%, up from 6.98% in September 2024.
This means a 65-year-old would start getting more than they put in from age 78, almost 10 years earlier than during the period of lowest rates.
A healthy 65-year-old with a £100,000 pension pot could get an annual income of up to £7,650, which is £670 more than last year.
Over retirement, this could mean an extra £14,000 for a man and £15,000 for a woman.
At age 60, the average rate was 6.93%, compared to 8.38% for a 70-year-old, showing rates often improve with age.
Annual income would be £6,930 at 60 and £8,380 at 70 for a £100,000 pot, a difference of £1,450.
A healthy 65-year-old man buying an annuity in September 2025 could expect a total lifetime income of £154,000, compared to £140,000 in 2024.
For a woman of the same age, the total would be £171,000, up from £156,000 last year.
At 70, a man could expect £134,000 and a woman £151,000.
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.”
Cowell added: “Annuities remain a crucial way for retirees to ensure they get what they want from their retirement income, as research from National Annuity Day revealed that just over a third (35%) of UK adults over 50 want a ‘steady and stable’ retirement income, while an additional quarter (24%) want to always be prepared with both a regular income and reserve for bills and costs.
“This demand for income certainty, alongside market conditions—including economic and regulatory factors—will continue to drive demand, especially with the planned IHT changes expected in 2027, which are prompting more people to consider annuities as part of their financial planning.”
He said: “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.”
