Pensioners get £1,000 extra income as annuity rates rocket AGAIN – ‘better off for life'

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Market-leading annuity rates have jumped an incredible 11.6 percent since January, according to provider Canada Life, and there is more growth to come. This will be a massive boost for retirees looking to buy a secure income that is guaranteed for life.

Pensioners have it tough right now, with the State Pension increasing by just 3.1 percent in April after the government axed the triple lock mechanism, while the Bank of England has warned inflation could soon hit double digits.

Many are having to choose between heating and eating, as household energy bills go through the roof, along with food, fuel and just about everything else.

On Thursday, the BoE hiked interest rates for the third month in a row, lifting them to 0.75 percent.

While the big banks have failed to increase their savings rates in response, annuity providers are paying new customers a lot more.

On January 2, Canada Life paid a 65-year-old man with £100,000 worth of pension a level, single life annuity income of £4,476 a year.

That has now jumped by 12 percent, which means the same man would get £5,021 a year today.

That would give him an incredible £545 extra income a year, or £45 a month, which is a real boost as living costs soar.

The annuity rate increases will not stop there, says Canada Life’s annuity sales director Nick Flynn.

Analysts reckon the Bank of England will hike base rates three more times this year in a bid to curb inflation, which would lift them to 1.5 per cent.

READ MORE: Pensioners get 20% more income for life GUARANTEED from annuities

Flynn warned that half of annuity purchasers people risk missing out on this year’s uplift because they fail to shop around for the best value plan at retirement.

Instead, they simply buy the plan offered by their insurance company.

Comparing quotes can give you a much better deal, Flynn says. “Remember, any income you get from annuity will make you substantially better off for the rest of your life.”

Annuities are not for everybody. Many find them inflexible, while if you die shortly after taking one out, you will get a poor overall return.

The majority of pensioners prefer to leave their money invested in the stock market via drawdown, but this can be risky as its value could fall if stock markets crash.

Annuities fell out of favour after the financial crisis when interest rates plunged, but are coming back into favour as they now offer more income.

Flynn said: “You could leave some of your pension invested via drawdown to generate stock market growth, and use some to buy an annuity to give you the security of a balanced income.”

However, it might be wise to wait a little before purchasing your annuity, as rates now looked set to rise even higher.



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