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Annuity rates up 19% since Brexit nosedive

brexitAnnuity 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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There are 2 comments at the moment, we would love to hear your opinion too.

  1. It would be interesting to know whether this has resulted in an increased take up of annuities.

    It will possibly be a sign as to whether advisers are out to do the best for clients or themselves. An annuity probably earns an adviser a one off 1% (After PCLS); whereas draw down is an ongoing golden goose (for the adviser, fund manager, platform and HMRC)

  2. In my recent experience, annuity rates have slipped by about 5% in the past month, though quite why I’m not sure.

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