Lifetime annuity rates have surged to their highest levels of the decade so far, according to the Standard Life Annuity Rates Tracker, reaching 7.72 per cent for a healthy 65-year-old.

This marks a "significant "recovery from July 2020, when rates were just 4.71 per cent, reflecting a 64 per cent increase.

It also marks an increase of 10.2 per cent from May last year, when the average annuity rate stood at approximately 7 per cent.

According to the tracker, a healthy 65-year-old male who purchased an annuity in May 2025 at a rate of 7.72 per cent 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 per cent.

For a man, this would provide a total lifetime income of £136,680, while a woman could expect to receive £153,770.

Standard Life head of annuities, Pete Cowell, suggested that higher long-term interest rates had driven the uplift.

"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."

Cowell claimed that, given the recent upward trend has been steady, it felt "unlikely" that annuity rates would fall back to historic lows.

"Interest in annuities is likely to remain strong, particularly given the anticipated changes to inheritance tax in 2027, which may prompt more people to consider annuities as part of their retirement planning," he 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 to do this is to keep some savings in a drawdown or stagger 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," Cowell added.

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