The standard annuity rate has increased 5.6% since the 12 May 2015, research by My Pension Expert has found.
This is the highest standard annuity rate in 2015 so far.
The research shows that a 64 year-old with a £100,000 pension would earn £303 a year more than they would have 7 weeks ago.
The best available income on 12 May was £5,370, compared to a possible £5,673 on 30 June. This adds up to an extra £6,060 over the course of the average 20-year retirement.
My Pension Expert attributes the rising rate to an increase in gilt yields. The yields on gilts, which are linked to annuities, rose in June after policymakers hinted at a future rise in interest rates.
The figures will come as good news for standard annuity holders which have seen rates plummet since the government’s pension reforms were announced. Rates fell 10% between August 2014 and January 2015 before hitting an all-time low in April 2015.
Scott Mullen, director at My Pension Expert, said:
“The 5.5% rise in the standard annuity rate is great news for those considering purchasing an annuity, as it could lead to a significant increase in their retirement income. It demonstrates just how volatile the market is and why it requires constant monitoring if you’re to make the most of your pension funds.”