Annuity sales are expected to continue rising in 2026 as more people look for stable, guaranteed income during retirement amid global market volatility and economic uncertainty. The steady rise in annuity sales over the past couple of years has been driven by high interest rates and growing concerns over investment risks, particularly in the stock market.
Why Are Annuities Proving Popular?
An annuity involves exchanging a lump sum of pension savings for a guaranteed regular income that lasts for the rest of your life. With the global economy uncertain and many concerned about market fluctuations, annuities provide peace of mind, offering financial stability.
Annuity sales have been growing, driven by high interest rates that have boosted annuity rates. In 2025, it’s expected that sales will surpass 100,000 for the first time in a decade. This marks a significant shift as more people opt for the assurance of annuities amid inflation, geopolitical tensions, and the weakening UK economy.
What Happened to Annuity Rates in 2025?
Annuity rates are determined by the amount you are converting into an annuity (your pension pot) and the rate provided by the annuity provider. In 2025, rates generally rose until June, before dipping slightly in the second half of the year. The table below shows how much a healthy 65-year-old could expect to receive annually for a pension pot worth £100,000:
| Month (2025) | Best Rate | Average Rate |
|---|---|---|
| January | £7,526 | £7,150 |
| February | £7,525 | £7,220 |
| March | £7,687 | £7,299 |
| April | £7,940 | £7,462 |
| May | £7,941 | £7,513 |
| June | £8,011 | £7,621 |
| July | £7,857 | £7,548 |
| August | £7,857 | £7,552 |
| September | £7,857 | £7,573 |
| October | £7,904 | £7,552 |
| November | £7,665 | £7,431 |
| December | £7,665 | £7,424 |
How to Get the Best Annuity Rate in 2026
Annuity rates may dip slightly in 2026 if there are further interest rate cuts, but finding the best rate for your personal circumstances is crucial. For example, a 65-year-old with £100,000 in savings could receive an annual income of £7,649 in January 2026, which is 8% higher than the lowest available rate of £7,100. This difference could result in £549 more per year or £13,725 more over a 25-year retirement.
If you have health conditions such as smoking or obesity, you may qualify for an enhanced annuity, which can offer a higher income based on a shorter life expectancy. Enhanced annuity rates can be up to 15% higher than standard rates, as shown by a recent quote comparison in 2025.
How to Choose the Right Annuity
Despite the benefits, only 29% of people who arranged an annuity in 2024-2025 took regulated financial advice, according to the Financial Conduct Authority (FCA). If you’re unsure about which annuity is right for you, it’s highly recommended to seek advice from a FCA-regulated financial advisor.
You can find an independent financial adviser through services like Unbiased and VouchedFor, which provide access to reviews and recommendations. Alternatively, Pension Wise, a government-backed service, offers free guidance to those over 50 with a defined contribution pension.
Conclusion
Annuities will likely continue to be an attractive option in 2026, particularly as economic uncertainty persists. Whether you’re looking for guaranteed income, better financial stability, or a way to protect your pension pot, annuities provide a secure solution. Be sure to take the time to explore your options, understand the available rates, and seek professional advice to make the best choice for your retirement future.
