Annuity rates may be set to soar amid market turmoil

Annuity rates could soar in 2026 amid market unrest, and prospective retirees are urged to seek advice. Year-on-year, the average annuity income has risen by £60 according to Moneyfactscompare.co.uk analysis.

• Annual annuity income has risen by £60 year-on-year on average, standing at £3,558 now, up from £3,498 in March 2025.
• Rising gilt yields impact annuity rate pricing, so rates could be set to soar in the weeks ahead. Gilts have been rising recently due to prolonged unrest in the Middle East.
• Annuities are a popular choice for retirees looking for a regular income in retirement; according to the Association of British Insurers (ABI), there was a 10% rise in sales for escalating annuities during 2025, versus 2024.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said:

“Pensioners looking to secure an annuity for a regular income could see a boost to the rates on offer in the weeks ahead. Due to the unrest in the Middle East, retirees may want to focus on protecting their current pension arrangements from stock market volatility but also adopt a ‘wait and see’ stance for providers to review their pension annuity rates, due to rising gilts. Ten-year gilts have been rising over the past few weeks, hovering around the 5% mark. Rising gilt yields have been known to cause annuity rates to soar. If this comes to fruition, it could mean retirees become hundreds of pounds better off. During 2022, annuity rates shot up amid interest rate volatility and stock market uncertainty, so much so, that someone who took annuity income in December 2022 versus the start of that year was around £900 per year better off on average.

“Seeking advice before making any rushed decisions is wise, no one knows how long the unrest will last. Circumstances can change, such as a deterioration of health or a change in someone’s risk preferences, so an annuity may be a suitable option to provide a guaranteed income during retirement. Those who may want a bit of flexibility could also choose part annuity and drawdown. Escalating annuities are also becoming more popular, as the Association of British Insurers (ABI) revealed a 10% rise in sales of these types during 2025, versus a year prior.”