Annuity rates have surged since the summer providing relief for customers on the hunt for fixed returns
With annuity rates at rock-bottom levels and the cancelling of plans for a secondary market, it's been a tough year for retirees hoping to secure a decent fixed level of income.
However, finally there is some relief as it was revealed annuity rates have jumped by 10.6 per cent since August.
On a £50,000 cash pot, the average annuity will now buy you an annual income of £2,591 according to data prepared by Investment Life and Pensions Moneyfacts.
"People approaching retirement will need to think about how they can bank an income to pay the bills," said Retirement Advantage's Andrew Tully.
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The reason for the good news is fairly straightforward: after months of falling gilt yields, they have nosed back up north, this has a knock-on affect on the deals annuity providers can offer.
Gilt yields and annuities
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"Annuity rates were hit hard by falling gilt yields in the immediate aftermath of the vote to leave the EU. Fortunately gilt yields are on the way up again. Providers are also pricing to attract business, and these two factors have combined to push annuity rates back up to pre-referendum levels.
"The continuing pressure on rates comes from people living longer, although there is evidence this trend is slowing. While we all come to terms with Brexit and the change in US presidency, yields on gilts are likely to be volatile. There is light at the end of the tunnel," said Tully.