Retirement income: Is the annuity making a comeback?

Laith Khalaf says the golden age of the annuity is in the rearview mirror

clock • 4 min read

Rising bond yields have pushed annuity rates up 20% this year meaning 'income for life' is no longer completely out of favour, but as Laith Khalaf writes, the market is unlikely to regain its former dominance

There was a time when 90% of retiring investors bought an annuity with their pension pot, before the pension freedoms ushered in a new era of individual retirement responsibility in 2015. The result hasn't been a cavalcade of Lamborghinis hitting the streets of Eastbourne, but rather most people now choose to invest their pension or simply withdraw it as a lump sum, with only 10% buying an annuity. But do higher interest rates mean all that is about to change? As a result of rising bond yields, annuity rates have increased by around 20% this year. Based on a £100,000 pension pot, a 65...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Income

Addressing the 'regulatory timebomb' of income security

Addressing the 'regulatory timebomb' of income security

'Advisers remain concerned about the levels of withdrawals'

Kevin Carr and Matt Morris
clock 19 February 2024 • 4 min read
L&G annuity sales hit all-time high of £1.4bn in 2023

L&G annuity sales hit all-time high of £1.4bn in 2023

‘Turning point' for guaranteed retirement income

Jenna Brown
clock 15 January 2024 • 3 min read
Annuities firmly back 'in vogue' as rates jump 54% in two years

Annuities firmly back 'in vogue' as rates jump 54% in two years

Guaranteed retirement income has been on ‘remarkable journey’

Jenna Brown
clock 11 December 2023 • 2 min read