Annuity rates reach highest levels since March 2009
Annuity rates are at their highest level since March 2009 after rising 44% in the last year, according to a leading investment platform.
Hargreaves Lansdown has revealed they have seen record annuity rates, with them providing almost 18,000 annuity quotes in the last 3 months, an increase of 70% on this time last year.
This means someone aged 65 with a £100,000 pension could now get an annuity income of £7,191 a year, up from £4,989 in October last year.
Annuity rates have been boosted by soaring long-term gilt yields.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, stated:
“Annuity rates are up an incredible 44% in the past year. The potential income for someone aged 65 with a £100,000 pension has risen by £200 in the past week alone. In recent years they’ve become also-rans of the retirement income market, but these rises should put them in contention again.
Annuities were once the go-to product for retirement income, but the introduction of pension freedoms means people had more choice of how they accessed their money, and drawdown took centre stage. The scale and speed of annuity rate rises could offer food for thought for anyone who ruled out an annuity in recent years because of the level of income on offer.”
Morrissey also claimed some retirees are discouraged from buying an annuity because of the rates being locked “so those sitting on lower rates from last year can’t benefit from more recent rises”.
