How much can a £100,000 pension pot give you in retirement? Britons can now secure 'best returns for over a decade'

With the next base rate decision in this upcoming week, retirees are urged to shop around for the best deals to ensure they are getting the most out of their money as possible.

Experts have warned, failure to do this could result in a loss of "thousands of pounds extra over the course of a long retirement".

A £100,000 pension pot can now generate an annual income of £7,795 for a healthy 67-year-old, according to new figures.

This represents a significant increase from £7,146 available in January, as guaranteed income solutions reach new highs in early 2025.

The improved rates mean retirees can secure better returns than at any point in recent years, with pension savers potentially benefiting from thousands of pounds in additional retirement income.

Steve Butler, CEO of Pension Potential, cautions that "too many retirees risk missing out by not shopping around" and emphasises that "with rates varying daily and enhanced annuities offering up to 80 per cent more, the difference between the best and worst deals can be significant."

He notes that "the gap between the best and worst rates can be as much as 15 per cent, and up to 80 per cent if you qualify for an enhanced annuity."

This could translate to missing out on tens of thousands of pounds over a lifetime, making it crucial for savers to explore all available options rather than defaulting to their current pension provider's offer.

Enhanced annuities based on health and lifestyle factors can provide even greater returns, with Butler stating that "a few minutes of research could mean thousands more in retirement income."

The gains are particularly pronounced for older retirees, according to data from Just Group. A healthy 70-year-old can now secure nearly nine per cent guaranteed income returns, whilst a 75-year-old could achieve around 10 per cent.

These returns could increase further once individual lifestyle factors and health history are taken into account.

Butler emphasises that "annuities are back and in a big way," adding: "We're seeing the best returns for over a decade, but many people are still defaulting to whatever their pension provider offers often without realising there are far better deals available elsewhere."

The situation is particularly pressing for Generation X savers, who Butler describes as the "forgotten generation" - too young to have accumulated generous defined benefit pensions and too old to have fully benefited from auto-enrolment, often leaving them with modest pension savings.

"If your pension pot is less than £100,000, making the right choice about how to turn it into income is absolutely critical. A poor decision could mean running out of money too soon, or being stuck with a lower income for life," Butler warns.

He encourages retirees to utilise free comparison tools, noting that "technology has made it easier than ever to compare annuity rates."

"Don't rush. Do your homework. Use the tools and support available to you because this is one of the most important financial decisions you'll ever make," he advises.