Annuities, which provide guaranteed income in retirement, pay out the most in more than a decade.
have rates increased by more than 35 pc over the past year and reached its highest point in 12 years.
This means that a 65-year-old with a pension of £100,000 can now get an annuity income of £6,637, according to investment platform Hargreaves Lansdown.
Last year they would have only received around £4,900 – an increase of over £1,700.
William Burrows of the Retirement Planning Project, a financial planner, said now would be a good time for many to consider convert their pension savings in a guaranteed income upon retirement.
“Now that rates have risen, people who regularly earn income from borrowings may seriously consider taking an annuity because the returns can be more attractive,” he said.
Annuities have fallen out of favor in recent years, partly due to the introduction of pension freedoms in 2015, which opened up more options for retirees. Before that, buying an annuity was the only option for most people with a defined contribution pension.
Demand for annuities also declined due to sluggish rates, which hit an all-time low in the wake of the Brexit vote.
The rates offered by annuity providers are determined by gold’s long-term yields, which are influenced, among other things, by the bank rate.