Annuity rates have increased by 8% for a healthy 65-year old over the last 12 months, according to new data.

The rate increases have added £11,020 and £12,960 to the total lifetime income expected for a 65-year-old man and woman respectively, according to the Standard Life Annuity Rates Tracker.

A healthy 65-year-old considering taking out an annuity now could expect to receive an annual income of £7,360, based on a £100,000 pension pot - an increase of £550 compared to January 2024.

Lifetime Annuity Rates - January 2025 vs January 2024

 Source: Standard Life Annuity Rates Tracker, 13 March 2025. Based on £100,000 pension pot.

According to the tracker, a healthy 65-year-old male who bought an annuity in January 2025 at a rate of 7.36% could expect a total lifetime income of £147,940. For a female of the same age, the expected income was £164,860.

Meanwhile, a healthy 70-year-old who bought an annuity in January 2025, could expect a rate of 8.21%. For a man, this would provide a total lifetime income of £131,350 while a woman could expect to receive £147,770.

Pete Cowell, head of annuities at Standard Life, expected annuity rates to continue to climb.

He said: “Looking ahead, we expect annuity rates, as well as the demand for these types of products, to remain strong, especially with pensions being brought into scope for inheritance tax from 2027.

“Wealthier savers may be encouraged to access more of their pensions, with annuities becoming an increasingly attractive way of doing so.”

As of January 2025, the rates for the average fixed-term annuity were 21.91% over a 5-year fixed term, 12.33% over a ten-year fixed term, and 9.18% over a 15-year fixed term.

The Standard Life Annuity Rates Tracker 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 from a Fixed-term annuity.