What annuity income can I get in 2026?

Annuity rates in 2026 are significantly higher than a few years ago. A healthy 65-year-old with a £100,000 pension pot can expect around £6,800–£7,200 per year from a standard level annuity (single life, no guarantee period). Rates vary significantly by provider, age, health, and type of annuity chosen. Enhanced annuities for people with health conditions can pay 20–40% more. Shopping around and getting quotes from multiple providers is essential — the difference between the best and worst rates can be 15–20%.

Are annuity rates going up or down?

Annuity rates rose substantially from 2022 to 2024, driven by increases in gilt yields and interest rates. In 2025/26, rates have largely stabilised at levels not seen since 2008–2010, making annuities significantly better value than during the low-interest period of 2015–2021. However, if interest rates fall in the future, annuity rates could come down. Many financial advisers suggest that current rates represent a good window for purchasing an annuity.

What is an enhanced annuity?

An enhanced annuity (also called an impaired life annuity) pays a higher income if you have a health condition, lifestyle factor, or shortened life expectancy. Conditions that qualify include diabetes, heart disease, high blood pressure, cancer, smoking, obesity, and many others. The income boost can be 20–40% or more compared to a standard annuity. Around 60% of annuity buyers could qualify for an enhanced rate, but many don't realise they're eligible.

Can I change my mind after buying an annuity?

You have a 30-day cooling-off period after buying an annuity. After that, the decision is generally irreversible — you cannot switch to drawdown or get your lump sum back. This is why it's extremely important to shop around, consider your health, and potentially get financial advice before committing. Some people choose to annuitise part of their pension and keep the rest in drawdown for flexibility.

Annuity Rates 2026 — How Much Income Will Your Pension Buy? | PocketWise

Annuity Rates 2026 — How Much Income Will Your Pension Buy?

Current UK annuity rates for 2026, how annuities work, what affects your rate, and whether an annuity is right for your retirement.

By PocketWise · 25 March 2026 · Last reviewed: 9 April 2026 · 4 min read Updated for 2026/27 tax year

Annuities provide guaranteed income for life in retirement. With rates at their highest in over a decade, here’s what you can expect in 2026.

Indicative Annuity Rates — 2026

Standard Level Annuity (Single Life, No Guarantee)

Pension pot	Age 55	Age 60	Age 65	Age 70	Age 75
£50,000	~£2,750	~£3,100	~£3,500	~£4,100	~£4,900
£100,000	~£5,500	~£6,200	~£7,000	~£8,200	~£9,800
£150,000	~£8,250	~£9,300	~£10,500	~£12,300	~£14,700
£200,000	~£11,000	~£12,400	~£14,000	~£16,400	~£19,600
£300,000	~£16,500	~£18,600	~£21,000	~£24,600	~£29,400

These are indicative rates only — actual quotes vary by provider and personal circumstances. Always get multiple quotes.

Joint Life Annuity (50% Spouse’s Pension)

Pension pot	Age 65 (both)	Age 65 + 60	Age 70 (both)
£100,000	~£6,000	~£5,700	~£7,200
£200,000	~£12,000	~£11,400	~£14,400
£300,000	~£18,000	~£17,100	~£21,600

Joint life annuities pay less than single life because they cover two lives.

What Affects Your Annuity Rate

Factor	Impact on rate
Your age	Older = higher rate (shorter expected life)
Health conditions	Poor health = higher rate (enhanced annuity)
Smoking	Smokers typically get 10–20% more
Pension pot size	Larger pots can access better rates
Type chosen	Level vs escalating, single vs joint, guarantee period — all affect the rate
Gilt yields	When government bond yields are high, annuity rates are better
Postcode	Some providers factor in regional life expectancy

Types of Annuity

Type	What it does	Trade-off
Level	Pays the same amount every year for life	Highest starting income, but inflation erodes real value
Escalating	Increases by a fixed % each year (e.g. 3%)	Lower starting income, but keeps pace with costs
RPI-linked	Increases with RPI inflation	Lowest starting income, but maintains purchasing power
Single life	Pays until you die	Highest rate — nothing for a partner
Joint life	Continues paying (usually 50–100%) to your partner when you die	Lower rate — but provides for your partner
Guaranteed period	Pays for a minimum period (e.g. 5 or 10 years) even if you die	Slightly lower rate — but protects against dying early
Enhanced	Higher rate for people with health conditions	Must declare conditions — significant income boost
Investment-linked	Income varies based on fund performance	Potential for growth, but no certainty

Level vs Escalating — Long-Term Comparison

Year	Level annuity (£7,000/year)	3% escalating (starts £5,200)	RPI-linked (starts £4,800)
1	£7,000	£5,200	£4,800
5	£7,000	£5,853	~£5,500
10	£7,000	£6,786	~£6,500
15	£7,000	£7,867	~£7,700
20	£7,000	£9,120	~£9,100
25	£7,000	£10,573	~£10,800
Total over 25 years	£175,000	£183,000	~£183,000

The escalating annuity overtakes the level annuity after about 14–16 years.

Enhanced Annuities

Condition	Typical income boost
Type 2 diabetes	10–25%
Heart disease / heart attack	15–30%
Cancer (depending on type/stage)	20–100%+
High blood pressure	5–15%
High cholesterol	5–10%
Smoking (10+ cigarettes/day)	10–20%
Obesity (BMI 30+)	5–15%
Kidney disease	15–30%
Multiple conditions	Cumulative — can be very significant

Example: Standard vs Enhanced at Age 65

Feature	Standard annuity	Enhanced annuity
Pension pot	£100,000	£100,000
Annual income	£7,000	£8,750 (+25%)
Extra per year	—	£1,750
Extra over 20 years	—	£35,000

Around 60% of people could qualify for an enhanced rate — always declare any health conditions.

Shopping Around

Provider type	Examples
Insurance companies	Aviva, Legal & General, Canada Life, Scottish Widows, Just Group
Your pension provider	May offer an annuity — but you have no obligation to buy from them
Annuity brokers	Compare the market across multiple providers

The Open Market Option

Detail	Information
What it is	Your legal right to buy an annuity from any provider — not just your pension company
Why it matters	The best rate on the market could be 15–20% higher than your pension provider’s offer
How to do it	Contact annuity brokers or comparison services
Cost	Brokers are usually free to use (paid by the annuity provider)

Annuity vs Drawdown

Feature	Annuity	Drawdown
Income guarantee	For life — no matter how long you live	No guarantee — depends on investment returns
Flexibility	Fixed once purchased	Withdraw what you want, when you want
Investment risk	None — insurance company bears the risk	You bear the risk — fund could fall in value
Inflation protection	Only if you choose escalating/RPI-linked	If investments grow above inflation
Death benefits	Limited (guarantee period or joint life)	Remaining fund passes to beneficiaries
Tax efficiency on death	Partner’s pension is taxed as income	Can be tax-free if you die before 75
Simplicity	Very simple — income just arrives	Requires ongoing management/decisions
Best for	Certainty, covering essential expenses	Flexibility, larger pots, other income sources

Combining Annuity and Drawdown

Many people use both:

Approach	How it works
Annuity for essentials	Buy an annuity to cover basic living costs (rent, bills, food)
Drawdown for extras	Keep the rest in drawdown for holidays, one-off spending, and flexibility
State Pension as base	Wait for State Pension, then top up with a smaller annuity and/or drawdown