Pension savers whose pots hit this amount being handed free £7,492
Pension savers with a £100,000 pension pot could secure an annual income of up to £7,492 in retirement. Retirees can get this gaurenteed income for life through a single life level annuity with a five-year guarantee, according to latest data from Hargreaves Lansdown's annuity search engine.
As gilt values decline, yields climb, which in turn elevates annuity rates, explained Helen Morrissey, head of retirement analysis at Hargreaves Lansdown: "The turmoil in the bond markets has caused annuity incomes to soar, giving an extra boost to a market that has already enjoyed a stellar year.
"The latest data shows a 65-year-old with a £100,000 pension can now get up to £7,425 a year from a single life level annuity with a five-year guarantee (which means the annuity will be paid out for the guaranteed period even if someone dies). This is up from £7,235 a year last week and up 48% on the £5,003 that was on offer this time three years ago.
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"We could see further income rises in the weeks to follow and this could push incomes up to the highs we saw in the aftermath of the mini-budget. Annuities continue to provide great value, and we can expect to see interest in them continue to increase, with many retirees deciding that now is the time to take the plunge and get a guaranteed income for life.
"However, it is important to look before you leap. Once bought, an annuity cannot be unwound and different providers offer different rates. If you take the first quote offered without checking the rest of the market, you may find you’ve made a costly mistake.
"You also don’t need to annuitise all your pensions at the same time if this doesn’t work for you. You can take a flexible approach and annuitise in stages throughout your retirement as your needs evolve. " "This means your remaining pot can remain invested in income drawdown where it can grow while you get the potential to take advantage of higher annuity incomes as you age."