We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

Annuity rates up 7 times in a month: What pension savers should do

A secondary annuity market u-turn, potential compensation for 90,000 annuitants and falling rates - it has been a rough time for annuities. But rates have bounced from their low, good news for those in need of secure income;

  • An extra £168 of non-increasing income per year for a 65 year old smoker compared with 4 weeks ago
  • Annuity rates have risen 3.4% since their low of 4 weeks ago
  • 7 annuity rate rises since 21st September 2016
  • Retirees who cannot tolerate a drop in retirement income should not ignore annuities
  • 75% of annuities are enhanced for health or lifestyle
  • What those closing in on retirement should do

Nathan Long – Senior Pension Analyst at Hargreaves Lansdown:

"Those nearing retirement and in need of secure income are starting to glimpse the light at the end of the tunnel. Annuity rates have bounced off their mid-September lows. They could go higher, but it’s uncertain if or when this may happen. Delaying decisions provides no certainty of more retirement income and many people do not have this luxury as they finish work and need a replacement salary. For those who cannot tolerate a drop of income in retirement, annuities still have an important part to play.

The direction of annuity rates is uncertain, but two things are clear. You will get more income buying an annuity today than you did 4 weeks ago, and shopping around for the best income remains critical especially as now 3 in 4 people can get higher rates by disclosing any health conditions or lifestyle traits. For those approaching retirement taking another look at what you could get will be time well spent."

What those closing in on retirement should do:

  1. Plan early - Everyone should start planning in earnest from at least age 50. This allows extra contributions to have an impact and also helps ensure you are invested in the right place. Planning the final years of work is useful too. You might be one of the growing number of people working part time or becoming self-employed as retirement approaches.

  2. Work out your income needs - What are your aspirations for retirement? Most people look at what their minimum requirements are to cover their essential living costs and then have a higher, preferred income level.

  3. Work out your retirement incomings - Retirement income can come from many sources. Work out what you will be receiving and whether it matches your income needs. Consolidating pensions ahead of retirement will make keeping track of your plans easier.

  4. Consider a mix and match approach - Your essential needs should ideally be met from guaranteed forms of income such as annuity or state pension. Above this you can afford to risk with the nice to haves and luxuries. If current annuity rates don’t appeal you can spread the risk that you buy at the wrong time by splitting your pension.

  5. Understand the risks of income drawdown - Those shunning annuities entirely should ensure they know the risks. Generally income drawdown works best for those able to tolerate a drop in their retirement income. As a guide drawing £1,000 a year for every £30,000 of pension should ensure your pension does not run out.


Globelynx and ISDN ready

Hargreaves Lansdown is equipped with a live in-house broadcast camera via the Globelynx network and has an ISDN line available for radio interviews - 0117 934 9006. To arrange an interview with a Hargreaves Lansdown spokesperson please contact the person you wish to speak to directly using the contact details above, or call Globelynx on 0207 963 7060 or email globelynx@globelynx.com.