Annuity rates have drifted down from the heights experienced in the immediate aftermath of the "mini" Budget, however they are still 19 per cent higher than this time last year (£5,691), the provider said.
Hargreaves Lansdown said an interest rate increase later this week (May 11) could see annuity incomes rise further in the coming weeks.
Helen Morrissey, head of retirement analysis at HL, said: “After drifting slowly down from their post 'mini' Budget highs we’ve seen a modest increase in the annuity incomes on offer over the past month.
“There are no guarantees but if the Bank of England chooses to hike rates again on Thursday, then we could see these incomes boosted a bit more in the coming weeks.”
Morrissey said annuities may not be the “retirement powerhouse” they were before the advent of pension freedom and choice but if a client is looking for a guaranteed income in retirement then they should be considered.
“For many years, the incomes available from annuities were low but over the past year we’ve seen a real revival in rates, partly because of increased interest rates,” she said.
“This means many more people are considering them as part of their retirement plan.”
Top tips for purchasing an annuity
Hargreaves Lansdown outlined five tips for purchasing an annuity. These were:
- Get a quote on the open market - Different providers offer different rates.
- Include health and lifestyle conditions - Weight, cholesterol levels, medication, conditions like diabetes or health events such as a stroke will be considered by annuity providers when assessing a quote.
- Consider inflation protection - Getting an inflation linked annuity to help preserve purchasing power.
- Don’t forget your spouse - If married or in a civil partnership, purchase a joint life annuity.
- Buy in chunks - Secure your basic needs and leave the rest invested where it will hopefully grow over time.
sonia.rach@ft.com
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