Annuity rates up 19% since Brexit nosedive

By Michael Klimes

Sep 19, 2018

Annuity rates have increased nearly 20 per cent since hitting rock bottom two years ago, Hargreaves Lansdown analysis shows.

In an update, the fund shop notes annuity rates that nosedived following the EU referendum result have risen.

Rates for 65-year-olds are up 19 per cent since their low in 15 September 2016.

At their lowest, a 65-year-old with a £100,000 pension could buy a non-increasing annuity income of £4,495 but today the same pension pot would buy an income of £5,431.

Investment in the UK stock market is up 17.5 per cent in the same period and the average managed pension fund is up 15.3 per cent.

Therefore, a partial annuity purchase now could help individuals de-risk ahead of any Brexit volatility.

Hargreaves Lansdown senior analyst Nathan Long says the remaining six annuity providers offer competitive rates.

He adds: “Pension investors may take the opportunity to de-risk ahead of potentially stormy waters by using a tranche of their pension to buy an annuity.

“The optimum annuity price point for most providers is around £40,000 to £60,000, which may appeal to those currently using income drawdown.”

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