What Annuity Will £300,000 Buy in 2026?

Annuity Rates in 2026: What to Expect

Annuity rates in the UK have improved significantly since the low-interest-rate environment of the early 2020s. Rising gilt yields — which directly underpin annuity pricing — have made annuities considerably more attractive than they were a decade ago. But rates still vary considerably depending on age, health, annuity type, and provider.

This guide provides an approximate illustration of what a £300,000 pension pot might purchase as a lifetime annuity in 2026. These figures are indicative only — actual rates depend on individual circumstances and the specific annuity purchased.

Key Factors Affecting Annuity Income

Before looking at figures, it is important to understand the variables that affect annuity rates:

• Age: Older annuitants receive higher income, as the annuity period is expected to be shorter
• Health and lifestyle: Smokers, those with certain medical conditions, or those with high BMI may qualify for an enhanced annuity with higher rates
• Annuity type: Level annuities pay more initially than escalating ones; single-life pays more than joint-life
• Guarantee period: Adding a 5 or 10-year guarantee reduces the income slightly
• Open market option: Shopping around across providers (using the open market option) can improve rates by 10–20%

Approximate Annuity Rates for £300,000 (2026 Illustration)

The following are approximate annual incomes a £300,000 pot might generate based on typical market rates in 2026. These are for illustrative purposes only and should not be relied upon as a quote:

• Age 60, single life, level: Approximately £16,500–£18,000 per year
• Age 65, single life, level: Approximately £19,000–£21,500 per year
• Age 70, single life, level: Approximately £22,500–£25,500 per year
• Age 65, single life, RPI-linked: Approximately £12,000–£14,000 per year (lower initially, rises with inflation)
• Age 65, joint life (50% to spouse), level: Approximately £16,500–£19,000 per year

Enhanced rates for those with qualifying health conditions can be 20–40% higher than standard rates.

£300,000 Annuity vs Drawdown

The decision between using £300,000 for an annuity or keeping it in drawdown involves trade-offs:

• An annuity at age 65 might pay £20,000/year guaranteed for life — regardless of markets or longevity
• Drawdown at a 4% withdrawal rate would also generate £12,000/year, but with investment risk and the possibility of running out of money — or having significantly more if markets perform well

Neither is universally better. The hybrid approach — using part of the pot for an annuity and keeping the remainder in drawdown — is a middle path many people explore.

The Open Market Option

Your existing pension provider is unlikely to offer the best annuity rate. You have the right to shop around using the open market option — comparing rates from multiple providers or using a specialist annuity broker. This step alone can meaningfully increase the income you receive.

Speak to a qualified financial adviser or annuity specialist for a personalised quote and guidance on whether an annuity is appropriate for your circumstances.