24 September 2026 last updated

Annuity rates for age 65 soar over 8pc a two decade record with high gilt yields

Annuity rates rise +6.6% this year for a 65 year old sending annuity income to over 8% per annum.

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Annuity rates for 65 year olds soar with income now over 8% the highest for two decades as government debt concerns send gilt yields to record highs.

Annuity rates reach a two decade record high as providers increase income for 65 year olds and they can receive 8.17% per annum after the 15-year gilt yields peak at 5.72% on 14 September 2026.

For our benchmark example based on a 65 year old using £100,000 to purchase a single life annuity and level income now receives an income of £8,170 per annum rising +6.68% or +£512 pa this year.

Annuity rates are mainly based on gilt yields which have increased significantly and since the recent low in December 2021 our benchmark income was £5,085 pa and has since increased by 61%.

There are a number of factors driving gilt yields higher including the US-Iran conflict restricting ship movements in the Strait of Hormuz, the rise in Brent oil price to $103 a barrel and the impact on higher inflation, and the competition from artificial intelligence for debt.

Find related news here:
Gilt yields at record high with investor concern over US $40tn debt
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Investors are concerned with the level of government debt in the US at $40tn and in the UK at £3tn. If investors perceive the risk of holding the debt is higher and they demand a higher yield as compensation.

In addition companies funding the artificial intelligence build out and investing $1tn using half this amount with the issue of long term bonds. This investments represents 14% of all US bonds issued in 2026 incrasing from 5% in 2025.

The competition means investors are buying artificial intelligence bonds and selling government debt thereby driving the price lower and yields higher.

Annuity rates continue to rise since the low in December 2021 and depending on age and features, reached as 129% for our benchmark example aged 55 years using £100,000 to purchase a 50% joint life and 3% escalation income.

Fig 1: Chart comparing annuity rates and 15-year gilt yields

The above chart shows our benchmark example for a 60 year old using £100,000 to purchase a single life and 3% escalating income is currently at £5,265 pa and this income is a record +94% higher than the recent low in December 2021 when the income was only £2,719 pa.

Gilt yields fell -32 basis points to 4.81% in October 2025 and was at 4.65% in February 2026 followed quickly with lower annuity rates for our benchmark example at £4,828 pa.

This changed when the US and Israel attacked Iran and 15-year gilt yields increased +63 basis points to 5.28% in March 2026 and on 14 September 2026 reached a more than 20 year high of 5.72%.

Annuity rates are likely to remain high in the short term with the evolving geopolitical tensions and competition between government and artificial intelligence debt driving gilt yields upwards.

The US-Iran conflict is expanding with the Houthis taking territory in the west of Yemen, islands in the Bab al-Mandab Strait and control of shipping in the Red Sea. Attacks by the Houthis against Saudi Arabian oil infrastructure could send Brent oil price to $150 a barrel and extend the conflict beyond the US midterm elections on 3 November 2026.

In the UK inflation is likely to rise with the central bank likely to increase interest rates by 0.25% before the end of the year. The bank of England took action to lower gilt yields by not issuing government gilts and this has lowered 15-year gilt yields to 5.56%.

For anyone retiring in the short term, the current record high annuity rates coupled to pension fund values at a relative high with the FTSE-100 index 15% higher than a year ago makes this an ideal time to secure income from an annuity.