Prospective retirees could see their income boosted by as much as 11% thanks to a sharp increase in annuity rates.
Annuity rates sank to an all-time low in 2012, driven down by low gilt yields and quantitative easing. In recent months, they have recorded a sharp rise, moving up by 6% between July and September.
Analysis by MGM Advantage shows that an average annuity today would pay out 11% more than it would have done a year ago. For someone with a retirement pot of £50,000 this means an extra £6,111 over the course of their retirement.
Retirement income at risk
Buying an annuity remains a lottery for many people. Many settle for their current pension provider’s offer although this is unlikely to be the best on the market.
Without checking rates and ‘shopping around’ it’s impossible to tell how much more you could have got. Since only 30% of annuity purchasers switch, a considerable number are likely to be missing out.
But the difference between the best and worst annuity in the market can still vary by as much as 38% however, so getting advice will help you find the right annuity for your needs.
Which? launches annuity advice service
Buying an annuity is a once-in-a-lifetime decision, and once you buy, you can’t change your mind. So, Which? has launched a brand new annuity advice service to help you make the right decision.
Which? Annuity Advisers has been launched to help consumers get the right annuity deal for their pension pot.
With access to one of the most extensive panels in the market, it conducts a thorough search to help you find the right deal, and will guide you through every stage of the annuity buying process.
Independent and unbiased
The annuity advisers and administrators are paid a salary, rather than commission. Any bonus they receive is determined by the quality of service and advice they provide.
The adviser charge is 1.50% of the amount invested into the annuity, subject to a £600 minimum and a £2,000 maximum.
Which? Annuity Advisers also offers an non-advised service for people who know what kind of annuity they want, but would like us to search the market on their behalf.
It will scour the market for the best rates and present them to you to make an informed decision about your retirement income.
The charge is 1% of the amount invested into the annuity, subject to a £600 minimum and a £2,000 maximum.