If you looked at annuities a few years ago and decided they weren’t worth it, it may be time to look again. Across the industry, annuity rates today are widely reported to remain up to 60% higher than they were in 2021 — a gap that has held for some time now, not a brief spike. For anyone with a pension pot still sitting in drawdown, cash, or simply undecided, that is a significant and lasting shift in what a guaranteed income could now cost you to buy.
As of early August 2026, that gap remains firmly in place — but rates move with the wider economy and can shift at any time, in either direction. If you have been waiting for “the right moment,” today is worth checking rather than assuming the position will still be the same next time you look.
What’s changed since 2021
Annuity rates are driven mainly by long-term interest rates and gilt yields — the return annuity providers earn on the money backing your income. Through 2021, gilt yields were close to historic lows, and annuity rates followed them down to some of the weakest levels in decades. Since then, yields have risen substantially and have stayed higher for an extended period, and annuity pricing has moved with them. The result, according to industry trackers, is that today’s rates sit near their strongest levels in well over a decade — and the improvement compared with 2021 has proven durable rather than a brief, temporary bounce.
What this means in practice
In plain terms: the same size of pension pot converts into a noticeably higher guaranteed annual income today than it would have done in 2021. For someone who was quoted a disappointing rate back then and decided to wait, or who assumed annuities were a poor deal based on what they saw a few years ago, checking again could be a genuinely worthwhile use of five minutes.
It is also worth remembering that the improvement is not the only thing that could increase your income. Over 1,500 health and lifestyle factors can qualify you for an Enhanced Annuity, on top of whatever the general market improvement provides — the two effects stack, and together they can make a considerable difference to your income for life.
Rates this strong won’t necessarily last forever
Nobody, including us, can predict how long the current environment will hold. What history shows clearly is that annuity rates move with the wider economy over time, sometimes significantly, in both directions. That uncertainty is exactly why an annuity’s core appeal — a guaranteed income you cannot outlive, locked in at the point you buy — matters, and why comparing the whole market properly before committing is worth doing whatever the rate environment looks like. You can read more about how rates are set on our annuity rates page.
An annuity won’t suit everyone
A guaranteed income for life is not the right answer for every pension or every retiree, and once set up an annuity cannot normally be changed or cancelled — which is exactly why getting independent, whole-of-market comparison right matters so much. Free impartial guidance on all your retirement options, including drawdown and blended approaches, is available from MoneyHelper.
Find out what your pension could buy you today
Our free comparison service searches the whole of the annuity market — including Aviva, Canada Life, JUST., Legal & General, LV=, Scottish Widows and Standard Life — and checks whether your health or lifestyle could increase your rate further still. It takes about five minutes, and there is no obligation to proceed.
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This article is for general information only and does not constitute advice. Comparisons to 2021 rate levels are based on industry-reported data and are not specific to any individual provider or guaranteed to apply to your circumstances; annuity rates change regularly and can go down as well as up, and past or current rate levels are not a guide to future rates. An annuity cannot normally be changed or cancelled once set up, and will not be right for everyone. Enhanced rates depend on individual health and lifestyle and not everyone will qualify. We will not provide advice or recommendations as part of our non-advised annuity comparison service; the decision is always yours. Free impartial guidance is available from MoneyHelper. Retirement Professionals Ltd is an appointed representative of pi financial ltd, authorised and regulated by the Financial Conduct Authority. FCA number 622943.