Interest in annuities has spiked as incomes increase by 48.7 per cent in two years, research from Hargreaves Lansdown has revealed.
Data from the firm showed that a 65-year-old with a £100,000 pension could purchase an annuity with an annual income of £7,358.
This is a "whopping" increase on the £4,946 income the same person would have got just two years ago.
This increase may not be winding down anytime soon as Hargreaves Lansdown head of retirement analysis, Helen Morrissey, explains: "Interest rate increases could bring further income boosts over the coming months."
She added that increased interest rates will also "certainly" stoke further interest in a market that has looked "decidedly lacklustre" in recent years.
Morrissey also detailed that interest has already "skyrocketed" with the number of quotes generated on Hargreaves Lansdown's annuity search engine "soaring" over the past year.
Hargreaves Lansdown's data showed that annuity quotes run on the search engine increased by 120 per cent over the 12 month period ending July 2023 when compared to the same period ending July 2022.
"They peaked in the aftermath of last year's mini-Budget before falling back," she explained, "however, they've been on a steady upward trend again in recent months".
Morrissey additionally pointed out that the advent of freedom and choice meant many people shied away from annuities.
However, she added that "the fact remains that if you need a level of guaranteed income in retirement beyond what you get from the state pension or a final salary scheme then annuities should always be a consideration.
"However, annuities have long been tagged as inflexible and offering poor value, and this can put people off. But neither of these things must be the case."
Morrissey concluded that shopping around and annuitising in stages are just two ways of increasing flexibility boosting income.
tom.dunstan@ft.com
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