Annuity rates have been rising due to wider market unrest, with the average annual annuity income up by over £100 since March 2026, analysis from Moneyfactscompare.co.uk reveals.

Annual annuity income has risen by £106 in less than six months, standing at £3,653 now, up from £3,547 at the start of March 2026, based on a £50,000 purchase price.

Rising long-term gilt yields impact annuity rate pricing - in recent months the 10-year gilt yield has risen above 5% on more than one occasion, driven by prolonged unrest in the Middle East and political uncertainty.

The popularity of annuities could well be set to rise, with unused pension pots falling under inheritance tax liabilities from April 2027.

The Association of British Insurers (ABI) revealed the total value of premiums paid into individual pension annuities grew 4% to £7.4 billion in 2025, the highest annual level since pension freedoms were announced in 2014.

While experts say the improvement is welcome news for people approaching retirement, they are also urging pension savers not to rush into what is often an irreversible decision. 

Many believe higher annuity rates, combined with inheritance tax changes due to come into force, mean annuities deserve fresh consideration – but only as part of a wider retirement plan rather than a reaction to short-term market movements.

As reported by Newspage, Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said: “Retirees releasing funds out of their pension pots must get good advice to understand the longer-term impact on their retirement income, and whether an annuity is an appropriate choice, or if they should consider an alternative guaranteed fixed term income plan.

“Making sure the annuity is set up correctly to suit a pensioner’s circumstances will be vital, such as a joint life annuity to continue payments to a beneficiary after death for the rest of their life. Sometimes it can be difficult to have wider conversations about later life, but it is really important to understand retirement options and estate planning for peace of mind.”