However, over a typical 18-year retirement, a pension pot of £50,000 would today generate £10,224 less income compared to an annuity from just two years ago
Aston Goodey, distribution and marketing director at MGM Advantage comments:
"This is some much needed good news for people looking to retire and convert savings into income. However, there is a sting in the tail as annuity rates are still very low and likely to remain so for some time to come. Some of the factors affecting annuity rates, namely low gilt yields, returns on corporate bonds and SolvencyII will continue to apply downward pressure on annuity rates. We think the last quarters' price moves are more about providers repositioning themselves following the introduction of gender neutral rates rather than a sustained rally of rates."
The following table shows the historical and current average annuity rates for a typical £50,000 pension pot, at age 65, with a level income and no guarantees.
Aston Goodey concluded:
"The continued Eurozone uncertainty will continue to apply pressure on UK gilts, and with the recent Budget confirming the prospect of further quantitative easing, annuity rates are likely to continue bumping along the bottom for a while to come. Many people will be wondering what, if any, options they might have. As always, seeking professional financial advice is a good starting point."
