Annuity rates are increasing – for now
Annuity rates have risen for the first time in more than a year but the improvement may be short-lived.
Six insurance companies have increased the rates they pay on annuities, which are used to convert a pension pot into a regular retirement income, during the past week, as rising bond yields feed through into the annuities market, according to financial adviser Hargreaves Lansdown.
The group said the move had led to its Annuity Index rising for the first time since June 2009, with a 100,000 pension pot now buying an annual income of 6,428 for a 65-year-old man who opts for a pension that does not rise in line with inflation, up from one of 6,291 a month ago.
But it warned that the improvement may be short-lived, as there were many factors that were likely to push rates back down again.