Updated: July 23, 2019

Annuity Rates

Find out what kind of annuity rate you qualify for and learn how to secure the very best one in our guide

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Tony Stevens

Author: Tony Stevens - Finance Expert

Updated: July 23, 2019

Whether you’re concerned you might outlive your money, or you’re in a higher tax bracket and want to benefit from annuities’ tax-free growth, an annuity may be the right financial investment for you.

Annuities are often sought after for the highly valued income security they provide for retirement years. But before you get started with an annuity, you’ll need to figure out how much money to invest to get your desired amount of monthly or yearly income.

In this article we’ll cover…

What is an annuity rate?

If you’re looking into getting an annuity, it’s important you take the time to understand what annuity rates are and how they work. An annuity is an investment in which you pay a lump sum to an insurance company, and in exchange, you get a guaranteed monthly payout or yearly income to support your retirement.

How do they work?

The annuity rate will depend on many factors including your age, sex, when you buy the annuity (i.e. the current interest rates), or any health conditions you have.

There are also many different types of annuities from variablefixedindexed, and equity annuities – how the annuity rate is calculated will differ according to provider and type of annuity.

Annuity rates are often described in terms of how much money you’ll get per year if you paid in £100,000.

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How to compare annuity rates

To find out where you can get the best rate, you’ll need to do a comparison of annuities providers. Many providers of annuities will offer an online rate calculator which you can use to compare UK pension annuities online.

Where can I find an annuity rates calculator?

You can find annuity calculators online on numerous financial websites, including the government’s PensionWise service.

You can use these online tools to compare annuity plans and see how they differ according to the information you provide.

However, these online annuity comparisons will only return raw figures without any context, i.e. exactly what those numbers mean when your needs and circumstances are factored in.

To get your pension annuities compared professionally and find the best rates, speak to an expert annuity advisor who knows how to compare a pension annuity against the whole market.

Since a number of factors specific to your situation will determine the rate a provider will give you on your annuity, an annuities expert can take you directly to the annuities companies that are the best match for you.

Compare 2020 UK annuity rates online

Annuity providers change their annuity rates over time, so it’s important to make sure your online pension annuity rates comparison is up to date with the latest rates for 2020.

Check that the dates on the websites that offer pension annuity rates are recent and the content is valid for 2020. For best annuity rates and product comparison, experts recommend you solicit the help of an annuities specialist. Make an enquiry or give us a call on 0808 189 0463 and we’ll put you through to an annuities advisor.

Annuity rates chart

An annuity rates graph will show your annuity rate according to the following factors:

  • Life expectancy – the longer you’re likely to live, the lower your annuity rate. The shorter your life expectancy, the more regular income you’ll receive.
  • Your health – this is connected to your life expectancy. If you have a health condition or are a regular smoker, you will need to put this information into the pension annuity rates graph.
  • Gilt yield – insurance companies buy gilt yields (government bonds) and use them to partially fund the annuities. The government pays the insurers some interest, and lower gilt yields will result in lower annuity rates.
  • Interest rates – lower interest rates equal lower annuity rates.

To use an annuities comparison chart, you will need to fill out some information related to your health and the type of annuity you’d like. The average annuity rates graph will use these factors to calculate how much money you’ll get per month or per year in exchange for buying an annuity.

Annuity rates tables

An annuity provider may have a variety of annuity rates tables, so you can calculate your annuity rate whatever your situation or preferred annuity type.

For example, some of the latest annuity rates tables on an insurer’s or bank’s website, could be…

The best annuity rates tables will be up to date with 2020 UK annuity rates and the right match for your situation. The annuity advisors we work with can help you calculate rates on annuities and compare the latest annuity rates tables.

Call us on 0808 189 0463 or make an enquiry to be connected to a Financial Services Authority (FSA)-approved expert on annuity rates comparison tables.

Pension annuities and interest rates

When the Bank of England base rates are low, annuity rates tend to be lower, and when base rates are high, so are annuity rates. Current UK pension fund annuity rates are affected by the economy: gilt yields and interest rates impact 2020 rates for UK annuities. But other factors, such as the UK population longevity, can have an effect on annuity rates. Retirement annuity rates in the UK hit a record low with the announcement of Brexit, but they’ve recovered since.

What are the current annuity rates?

You will need to research the latest monthly analysis of annuities and gilt yields, to find the current UK pension fund annuity rates.

The annuities specialists we work with can do this work for you and show you how interest rates impact your annuity rates. They’ll be able to help you get the best quote on UK pension fund annuity rates. Make an enquiry and we’ll put you in touch with an expert!

What is the best annuity rate for retirement?

As with all financial investments, there is no one size fits all answer to what the best pension annuity deals are.

Among other factors, the annuity rate you get will depend on your health, age, life expectancy, investment risk appetite, and when you take out the annuity.

What annuity rates can I expect at age 55?

Generally, the younger you are when you purchase a life annuity, the lower your rates will be, because there will be a longer payment period due to life expectancy. So, for example, annuity rates at age 55 will be lower than the rates you’d get at age 70.

To find the best retirement and pension annuity rates in 202, speak to an expert annuities advisor. An annuities specialist can help you find the best rated annuities with a simple whole of market comparison and an analysis of which annuity type would best match your needs.

Best annuities for retirement

Investing a lump sum with an annuity provider will secure the steady stream of income you’d like to have in place for the future. You can find the best annuities for retirement by comparing the ratings of commissions, fees, benefits, and even the financial health and reputation of the annuities insurers or banks.

Assessing the benefits and risks of an annuity can leave even the most experienced investors wondering what the best option is. Finding the best annuities for retirement can be a complicated and time-consuming process: a wise investor will use the help of an annuities specialist to get expert help on thoroughly researching the market.

If you’d like help in finding the best performing annuities call us on 0808 189 0463 or make an enquiry. We work with highly qualified and experienced annuities experts and can connect you with the best advisor for your needs.

Best annuity products for compound interest

As a retirement saving, annuity products can earn tax-deferred interest. If you earn interest on this interest, your annuities account will compound in value. How compound interest works on annuities depends on the specifics of the contract and annuity type.

Annuity products, such as deferred fixed annuities, or equity indexed annuities, provide different functions for earning tax-deferred, or compound interest.

But getting the best annuity product for your situation can make a real difference as to how much money you get in exchange for your investment.

Speak to an annuities expert who can bring you up to date with new annuity products and explain how the compound interest varies from contract to contract.

Taking the time to understand which annuity product will earn you the best compound interest rates will pay you back in increased dividends for years to come!

How to calculate the interest rate of an annuity

You could use an online calculator tool as a starting point to get a rough idea of the interest rate you’re likely to end up with, but since annuities are complex, speaking to an expert to get a bespoke calculation is recommended.

You can only work out the interest rate of an annuity and determine how much your annuity will be worth in the future once you know: how much you plan to invest, the rate of return your annuity guarantees, or the amount of your regular payment and interest rate offered.

To get the best deal, you’ll need to shop around with the help of an annuities expert and compare offers for annuity interest rates from top providers.

What are typical UK annuity rates?

Annuity rates are generally calculated in terms of how much you’d get every year if you invested £100,000.

For example, you’d get £5,000 per year if you invested £100k with an annuity rate of 5%. In this scenario, if you paid in £50,000, you would be paid an annual lump sum of £2,500.

What are the best annuity rates for £100K?

The best annuity rates for 100k would differ depending on whether you’re looking at life annuity rates, 15 year, 10 year, 5 year and 3 year annuity rates.

The specifics of the annuity type you are going for will play a big part in determining how much regular income you’ll get in return for the pension savings you invest.

What is the average rate of return on an annuity?

Some experts cite an average annual return rate on fixed indexed annuities at between 3-4% at the time of writing, while 5-6% is the high interest annuities range, and between 1-2% in the lowest range bracket.

If you’re wondering how to find the highest interest rates of an annuity, you can use an online annuity comparison tool. Or for best results, speak to an expert annuities advisor by making an enquiry or calling us on 0808 189 0463.

What are guaranteed annuity rates?

A guaranteed annuity rate is a guaranteed rate that you’ll be paid monthly, quarterly or yearly in exchange for buying an annuity.

You hand over a lump sum and get a guaranteed income. Pensions with guaranteed annuity rates have to pay out an income at the rate agreed in the annuity for the rest of your life. However, pension providers now generally no longer offer guaranteed annuity rates. But if you took out a pension anywhere between the 1970s and the 1990s, there’s a chance you may have a guaranteed income annuities rate product.

To find out if you have a guaranteed annuity rate tied up in your pension, contact your pension provider.

It’s recommended that you shop around for the best rated annuities companies to get the best deal on the market when buying an annuity. But if you have a pension with a guaranteed annuity rate most experts would suggest hanging onto it.

Which companies are best for annuities?

The top annuity companies in 2020 are often evaluated based on policy features, fees and commissions, and reputation and financial strength.

Here’s just a handful of the annuity providers in the UK…

  • MassMutual Annuities
  • American Equity
  • Prudential Annuities
  • AIG Annuities
  • Pacific Life Annuities
  • Alliance Life Annuities
  • Fidelity Annuities
  • Farm Bureau Annuities
  • Genworth Annuities
  • Facet Wealth

This list is by no means comprehensive. Speak to an expert advisor who will have contacts with the best annuity companies to find out which provider would offer you top rates.

Individual providers will assess your situation by taking into account how long someone with your health history and age is likely to live. Some companies will also take your postcode into account. An expert advisor can save you time and money by taking you directly to the providers with the best annuity products for your circumstances.

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For those who want the peace of mind a guaranteed lifelong income brings, an annuity can be a valuable tool: when planning for retirement, it’s important to know how much income you’ll be able to rely on.

While it may be fairly easy to calculate the basic annuity rate that you’d get back for a lump sum investment, it’s not always easy to know which provider or annuity type will give you the best rate.

Call us on 0808 189 0463 or make an enquiry, and we’ll connect you with an annuities expert who can help you compare the best annuity rates on the market and how much your annuity could earn in compound interest.

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We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions Ask us a question and we'll get the best expert to help.

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Tony Stevens

Tony Stevens

Finance Expert

About the author

Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

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