Annuity charges soar to 14 yr excessive

Common annuity charges have successful a 14-year excessive and have elevated by 52% prior to now 9 months, in response to new information.

The rise continues a surge this yr in annuity charges which have been within the doldrums for a few years.

Knowledge from Canada Life means that the break-even level when annuity patrons would obtain their authentic pension again by way of revenue, has fallen by seven years from 22 years to fifteen years.

A benchmark annuity of £100,000 at age 65 would now pay a assured revenue of £6,873 a yr in comparison with £4,521 firstly of 2022.


Inflation-linked annuity charges have additionally risen and are up 77% over the previous 9 months. A benchmark £100,000 annuity linked to RPI will now pay a beginning revenue of £3,896, in comparison with £2,195 firstly of the yr.

Nick Flynn, retirement revenue director, Canada Life, mentioned: “It’s has been a record-breaking yr for annuity charges, with incomes at a stage we haven’t seen for over a decade. I’d must look again to earlier than the banking disaster of 2008/9 to see annuity charges at an analogous stage as in the present day.

“Within the present financial local weather, the place else might you obtain nigh on 7% threat free revenue in retirement? That’s how sturdy annuity charges are proper now which is why they’re price greater than only a second look.

“With the suitable ensures and worth safety choices, annuities can now give drawdown an excellent run for his or her cash by way of the advantages out there. Shoppers planning their retirements or trying to de-risk their funding portfolios ought to take one other take a look at annuities.”

Mr Flynn mentioned purchasers might now think about using annuities alongside drawdown and that phased annuity buy all through retirement may very well be a technique to discover. 

• Supply: Canada Life annuity charges as at 30.9.2022. Benchmark annuity charges for £100,000 at age 65. 10-year assure, single life, no escalation.