State pensioners can get £9,877 on top of their state pension (Image: Getty)
State pensioners aged over 70 can get an extra £8,433 on average paid out to them each year on top of their DWP state pension payments, according to retirement specialists Standard Life.
The experts have released their annuity tracker, updated for the most recent data available, July 2026, and the rates have been increased to an 18-year-high, making more money available to pensioners who take out an annuity on top of their state pension.
Annuities are a product which pensioners can buy using their private pension pot (usually built up from workplace pension or savings) which converts your pension savings into a guaranteed annual income until you die.
As explained by life insurance firm LV: “A pension annuity is a lifetime annuity you can buy using the money from your pension pot. It will pay you an income for the rest of your life. To be able to receive a pension annuity, you must be at least 55 years old and have at least £2,000 to invest after you’ve taken any tax-free cash.”
Annuities keep your money invested, which allows it to continue to grow, while also balancing your life expectancy against the money you spend on them.
A bit like life insurance, annuities weigh up your age, lifestyle and health factors to determine how much to pay out each year, as well as the amount you have in your private pension.
According to Standard Life, retirees aged 70 and over can get £8,433 per year paid out by an annuity on average, based on current rates and assuming a pension pot of £100,000 before tax.
Pete Cowell, Head of Annuities at Standard Life, said: “Annuity rates have reached 7.75% [for over 65s], the highest rates since August 2008, underlining just how much the retirement income landscape has shifted in recent years.
“At today’s rates, the time it takes to receive back your initial investment has significantly shortened. The payback period for a £100,000 annuity purchase with a rate of around 5% in 2020 would have taken around 20 years to repay. However, with today’s rates closer to 7.75%, that falls to around 13 years, depending on individual circumstances.”
Standard Life adds: “According to the Tracker, a healthy 65-year-old male who bought an annuity in July 2026 at a rate of 7.75% could expect a total lifetime income of £156,000. For a female of the same age, the expected income was £177,000.
“Meanwhile, a healthy 70-year-old who bought an annuity during the same period could expect a rate of 8.43%. For a man, this would provide a total lifetime income of £135,000 while a woman could expect to receive £155,000.”
It means a healthy 70-year-old could expect a payment of up to £8,430 per annnum based on the latest 8.43% rate from Standard Life.
LV says about annuities that there are some downsides – they are, like the pension pot itself, subject to tax.
They also cannot be changed or surrendered later, so you need to be sure you want one before you proceed as there’s no going back.
It adds: “The pension annuity cannot be cashed in or surrendered at any time.
“Purchasing a pension annuity is a once and for all decision. The options you select when you buy the annuity cannot be changed later on. Annuity payments are classed as income and are subject to income tax, and could affect any state benefits you claim – it is worth seeking advice from a financial professional to see what income tax you may be liable for.
“Depending on how long you live, you may receive less than you paid for your annuity.
“Ensure you outline any medical conditions you or your partner have as it may mean you receive a higher annuity income.”