Annuity rates have gone up seven times since 21 September 2016, according to data published today (21 October) by Hargreaves Lansdown.
This compares with a plummet in annuity rates post-Brexit vote decision on 24 June.
In July, FTAdviser reported annuity rates fell on average by 3.6 per cent since the UK voted to leave the European Union, leaving a 65-year-old buying an annuity worse off at that time than a 60-year-old buying one six months before.
However, in total, rates have risen 3.4 per cent since their low of four weeks ago, providing an extra income of £168 of non-increasing income per year for a 65 year old smoker compared with 4 weeks ago.
According to Hargreaves Lansdown, retirees who cannot tolerate a drop in retirement income should not ignore annuities.
Hargreaves Lansdown made a number of key recommendations for those closing in on retirement.
The firm advises to prepare early, beginning planning in earnest from at least age 50, and work out income needs for retirement and retirement incomings.
It also suggested ]considering a mixed and match approach using guaranteed income to look after essential needs.
However the firm also pointed to the need to understand the risks of drawdown, noting it generally works for those able to tolerate a drop in retirement income.
For Nathan Long, senior pension analyst at Hargreaves Lansdown, those nearing retirement and in need of secure income are starting to see the light at the end of the tunnel.
"Annuity rates have bounced off their mid-September lows. They could go higher, but it’s uncertain if or when this may happen. Delaying decisions provides no certainty of more retirement income and many people do not have this luxury as they finish work and need a replacement salary."
He said the direction of annuity rates is uncertain, but two things are clear.
"You will get more income buying an annuity today than you did four weeks ago, and shopping around for the best income remains critical especially as now three in four people can get higher rates by disclosing any health conditions or lifestyle traits.
"For those approaching retirement taking another look at what you could get will be time well spent."
ruth.gillbe@ft.com
