Annuity rates bounce back to pre-crash level

ANNUITIES have completed another stage of their dramatic comeback as they now pay rates of income not seen since before the financial crisis.

- By Harvey Jones

With resurgent inflation driving up gilt yields, which are used to set annuity rates, this retirement income option is drawing in more savers who once dismissed them as poor value.

A 65-year-old with a £100,000 pension can now secure up to £7,793 a year from a single-life level annuity, with a five-year guarantee. That compares to as little as £4,943 four years ago in August 2021, a rise of 58%, with little sign of falling yet.

Pensioners are responding by using more of their retirement pots to buy annuities, spending on average £162,729 today, up from just £62,301 in 2021.