Pensioners who have £100,000 in pension pot handed £7,146 each

New data released this week shows 82,061 annuities sold compared to 59,163 in the previous year.

People are snapping up annuities amid the Cost of Living crisis, with sales skyrocketingby nearly 39 per cent in 2023/24. New data released this week shows 82,061 annuities sold compared to 59,163 in the previous year.

A 65-year-old with a £100,000 pension pot can currently obtain up to £7,146 per year from a single life level annuity. This represents a substantial 43 per cent increase from just three years ago, research from Hargreaves Lansdown has shown.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: "It's vital that you consider what you need from your retirement income and look across the market before deciding to purchase an annuity rather than taking the first or highest income offered.

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"Annuity comparison tools can allow you to do this easily and effectively." She said: "There could be times during retirement when you need to take a bit more from your income to cover big expenses such as holidays, but doing it on a sustained basis can lead you to erode your savings pretty quickly and leave you in trouble later on.":

She added"As a rule of thumb, withdrawals from a drawdown pot should be around four per cent per year or in line with the natural yield on investments to remain sustainable long-term." Rob Hillock, a senior manager in the personal financial planning team at leading independent consultancy Broadstone, said: “The increase in annuity rates has fed through into a significant rise in sales through 2023/24 as pension savers rush for security and to lock in elevated rates.

“Given annuities offer peace of mind that retirees’ money will not run out during retirement it is perhaps unsurprising that more attractive rates have led to a surge of popularity. Overall, the picture in the retirement income market is of more people reaching retirement with defined contribution (DC) pensions leading to an increase in access and money flowing into these products.”