Record 54% jump in annuity rates

Canada Life has set out the findings from analysis of annuity rates over the last 10 years, which highlights that annuity rates have increased by around 54% in just two years.

The research found that a benchmark annuity at the start of 2022 with a £100,000 purchase value would have paid an income in the region of £4,540 a year for someone aged 65 with no health or lifestyle conditions to declare, whilst that same annuity two years later would pay around £7,000 a year, driven by rising interest rates and the returns available on gilts.

According to the research, over the course of a 20-year retirement, the annuity at today's rates would deliver around £49,200 extra income compared to an annuity sold in January 2022.

What is an annuity?

A pension annuity involves the exchange of either your entire or a portion of your pension savings for a dependable, regular income over a specified period. There are two variations: a guaranteed income and a non-guaranteed income.

Despite the increase in pension flexibility, annuities persist as a suitable option for many individuals due to one crucial certainty: the assurance of a guaranteed income for the entirety of one's life.

Find out more about annuities here.

Speak to your usual TPO Adviser if you have any questions about annuities.

This information is correct as at 16/01/24.

Please remember that a pension is a long-term investment vehicle for retirement. Your eventual income will be largely determined by the size and nature of your investment fund at retirement, future interest rates and tax legislation

Source: https://www.canadalife.co.uk/news/in-just-two-years-annuity-rates-have-risen-by-record-amounts/