UK Annuity Incomes Rise as Gilt Yields Increase

Average annual annuity income for UK retirees has risen by £106 since March 2026. Analysis from Moneyfactscompare.co.uk shows that a 65-year-old with a £50,000 pension pot can now secure an average annual income of £3,653, up from £3,547.

This increase is driven by long-term Government bond yields, known as gilt yields, which have exceeded 5% several times in 2026. This trend is attributed to political uncertainty and prolonged conflict in the Middle East. The Association of British Insurers reported a market revival, with £7.4 billion paid into individual pension annuities in 2025, marking a 4% increase and the highest annual total since 2014.

Financial experts suggest annuities are becoming more attractive as the Government of the United Kingdom prepares to bring most unused pension funds into the scope of inheritance tax starting in April 2027. While rates are increasing, advisors caution pension savers to seek professional guidance before making irreversible decisions, noting that further volatility may occur around the upcoming Autumn Budget.