Annuity rates continue to improve, with Canada Life being the latest provider to reprice rates upwards again.
The insurer points out that this is the 16th time this year it has increased rates, with rates rising 40 per cent since the start of 2022. While this might make them look a more attractive option for retirees, particularly those seeking a secure income in retirement, it should be noted that a fixed annuity income can be eroded by higher inflation rates.
As a result of this latest re-pricing, Canada Life says a single person aged 65 will now receive an income of £6,353 a year from a £100,000 pension fund. This compares to an income of just £4,542 at the start of 2022.
Canada Life says this additional £1,811 a year — guaranteed for life — translates into an extra £36,220 over a 20-year period.
Canada Life retirement income director Nick Flynn says: “Annuity rates have continued to bounce back following changes to base rate and the improvements in yields on gilts, with rates up around 40 per cent this year.
“This sustained growth in potential income warrants giving annuities a second look, especially for anyone concerned about income security in retirement.
“Annuities can play a key role in retirement plans and it will always play to shop around for not only the best rate but the right shape annuity. An adviser or broker will help choose the right annuity for the clients’ individual circumstances.”