Annuity rates have more than recovered from post-Brexit record lows, in the longest continuous period of growth in six years.
Figures from comparison site Moneyfacts given exclusively to FTAdviser revealed annuity rates had been rising for five straight months, increasing by 13.6 per cent since record lows in September 2016.
Out of the seven providers still operating in the market on 10 February, Canada Life And Hodge Lifetime offered the best value, with Aviva also performing well in certain age groups.
Prudential - which FTAdviser last week revealed is in the process of winding down its annuity business altogether - offered the worst value in the most instances, with Retirement Advantage not doing much better.
Overall, November saw the strongest recovery of the five months, with annuity rates rising on average 5.5 per cent.
This change was in line with the movement of gilt yields, which also hit record lows in the months after the vote to leave the European Union.
As of 6 February 2017, 10-year gilt yields stood at 1.29 per cent, after falling well below 1 per cent in July.
However, like gilt yields, overall annuity rates were still comparatively low, only matching their March 2016 levels.
Moneyfacts revealed the rates offered by the seven remaining providers - Aviva, Canada Life, Hodge Lifetime, Legal & General, Prudential, Retirement Advantage and Saga - to FTAdviser.
For a 55-year-old with a £50,000 pot looking to purchase a standard, non-guaranteed annuity, Canada Life provided the best rate, offering an annual income of £2,019.
Prudential offered the poorest value, paying £1,815 a year.
For a 60-year-old with the same amount of money, Hodge Lifetime offered the best value, with an income of £2,242 a year. The worst value for that age group was, again, Prudential, at £1,981.
Hodge again topped the list for 65- and 70-year-olds, offering annual income for £2,561 and £2,962 respectively.
Prudential again offered poorest value for both 65- and 70-year-olds (£2,283 and £2,578).
For those looking to buy a guaranteed income at age 75, Aviva offered the best value, paying £3,623 a year for a lump sum of £50,000.
Retirement Advantage offered poorest value, paying an annual income of £2,918 - more than £300 below the next worst rate, offered by Prudential.
Retirement Advantage had the second-lowest rates in the 65- and 75-year-old age groups.
In the enhanced annuity market, Just, Saga and Legal & General offered some of the best rates, while Retirement Advantage provided poorest value in three of the five age groups.
Richard Eagling, head of pensions at Moneyfacts, said prior to the recent upturn, it "appeared that we had reached a tipping point where annuity rates had fallen to such an extent that many retirees no longer regarded them as value for money, even though they provided the security they desired".
He went on: "The recent recovery in annuity rates could be enough for some retirees to reassess the value of annuities, although the benefits of this will only truly be realised if individuals take advantage of the open market option and shop around for the best rate."
When FTAdviser asked Prudential to explain why its rates were so consistently low, a spokesperson revealed the company was planning to shut down its annuity business entirely.
A spokesperson for Retirement Advantage said: "‘The annuity market remains fiercely competitive and you will always see providers coming in and out of the best buy tables.
‘"At any given time there are thousands of rates for different ages and medical conditions in the market, which shows the value of shopping around for not only the best income but the right shape annuity for a client’s personal circumstances."
The spokesperson added that the firm had raised its rates by 2 per cent in early February.
Christopher Foster, a financial adviser with Pennines IFA, said even with the recent recovery, annuities did not make "economic sense", adding he had not had any annuity clients for 18 months.
But he said this would not always be the case.
"Our feeling is that in a few years, as interest rates start to rise, and hopefully annuity rates also rise, we think there will be a definite place for annuities in our clients' portfolios again," he said.
james.fernyhough@ft.com
