New research from Canada Life shows that today’s annuity rates have brought forward the break-even point by seven years compared to 2021 data.
Today’s competitive annuity rates mean the payback period is now 14 years on a benchmark £100,000 annuity1 purchased by a 65-year-old, generating an income of £7,373 a year.
By contrast, in 2021 the same £100,000 annuity would have required 21 years to recoup the initial investment, generating an income of £4,662 a year. According to the latest figures from the Office for National Statistics, a 65‑year‑old woman is expected to live for another 21 years, and a 65‑year‑old man for another 19 years 2.
At today’s annuity rates, this means a 65 year‑old woman could expect, on average, seven extra years of annuity payments after getting back her original investment, and a 65‑year‑old man could expect five extra years of payments.
Today, a Canada Life benchmark annuity for someone aged 65, with no pre-existing health or lifestyle conditions, would pay in the region of 7.4%. Disclosing common health or lifestyle conditions such as diabetes, high blood pressure or being a smoker can significantly increase the annuity rate.
Nick Flynn, Retirement Income Director at Canada Life comments on the research:
“The current macroeconomic environment means annuity rates remain at some of their highest in a decade. As a result, people are recouping their initial outlay significantly earlier than they would have done just five years ago.
“Attractive pricing and the certainty of a guaranteed income for life is increasingly valuable as people live longer and face extended retirements, making annuities a strong choice for those seeking financial stability and peace of mind.
“The inclusion of pensions in inheritance tax calculations from April 2027, is only serving to generate further interest in annuities.
“We are currently in a buyer’s market, so prospective retirees should shop around before purchasing an annuity to ensure they secure the best possible rate. An annuity is an irreversible decision, so we always recommend speaking to a financial adviser or annuity broker who can help you understand the choices available.”
-ENDS-
Notes to editors
1. Canada Life benchmark annuity as of 26 March 2026, £100,000 purchase price for a 65-year old with no health or lifestyle factors.
2. ONS National life tables – life expectancy in the UK: 2022 to 2024
Enquiries:
Press enquiries should be directed to:
Katie Ormrod, Canada Life, +44 7834 74022, katie.ormrod@canadalife.co.uk
About Canada Life:
Canada Life is part of a group of companies controlled by Great-West Lifeco Inc., a Canadian headquartered, international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. Through its subsidiary companies, Great-West Lifeco operates in Canada, the United States, and Europe. Great-West Lifeco trades on the Toronto Stock Exchange under the ticker symbol GWO and is a member of the Power Corporation group of companies.
Canada Life Limited began operations in the United Kingdom (UK) in 1903 and provides UK individuals and businesses with a range of retirement, investment, insurance and wealth solutions. Canada Life offers individual annuities, pension de-risking solutions, home finance, estate planning and investment options, and workplace protection products.
Canada Life Limited (no.973271) is registered in England and Wales, authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Stonehaven UK Limited (no.05487702), trading as Canada Life, is registered in England and Wales and is authorised and regulated by the Financial Conduct Authority. Canada Life International Limited (no.033178C) and CLI Institutional Limited (no.108017C) are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance (Ireland) DAC (no. 440141) and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland.
Canada Life Asset Management is the brand for investment management activities undertaken by Canada Life Asset Management Limited (no.3846821), Canada Life Limited and Canada Life European Real Estate Limited (no.03846823). Canada Life Asset Management Limited is authorised and regulated by the Financial Conduct Authority.
Please note that while Canada Life Limited and Canada Life Asset Management Limited are regulated as stated above, property management and the provision of commercial mortgages are not regulated activities.