Investment - Articles - Annuity rates surge as bond turmoil continues

 Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “The turmoil in the bond markets has caused annuity incomes to soar, giving an extra boost to a market that has already enjoyed a stellar year. The latest data shows a 65-year-old with a £100,000 pension can now get up to £7,425 a year from a single life level annuity with a five-year guarantee. This is up from £7,235 a year last week and up a whopping 48% on the £5,003 that was on offer this time three years ago. We could see further income rises in the weeks to follow and this could push incomes up to the highs we saw in the aftermath of the mini-Budget.

 Annuities continue to provide great value, and we can expect to see interest in them continue to increase, with many retirees deciding that now is the time to take the plunge and get a guaranteed income for life. However, it is important to look before you leap. Once bought, an annuity cannot be unwound and different providers offer different rates. If you take the first quote offered without checking the rest of the market, you may find you’ve made a costly mistake. Using an annuity search engine can help you check the market quickly and easily before you make a decision.

 You also don’t need to annuitise all your pensions at the same time if this doesn’t work for you. You can take a flexible approach and annuitise in stages throughout your retirement as your needs evolve. This means your remaining pot can remain invested in income drawdown where it can grow while you get the potential to take advantage of higher annuity incomes as you age.”