Annuities rates have reached their highest level for four years. The increase in annuities has been brought about an increase in long-term gilt and bond yields and by the competitiveness of the top providers to provide the best rates.
Whilst life expectancy continues to rise and therefore rates should become worse, yields also need to continue to rise or annuities will fall.
Our view
Further rises depend on bond yields and we suggest that markets will not rise but fall over the next two years. For those who are cautious and approaching retirement, we suggest you do not delay purchasing an annuity as we do not expect the rates to remain high for much longer.
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