The standard annuity rate rose to its highest level for the whole of 2015 during June, according to figures released this morning.
New research by My Pension Expert showed the standard annuity rate has increased by 5.642% since 12 May.
A 64-year old with an £100,000 pension pot would be £303 a year better off than seven weeks ago, the company said.
The best offer available to them on 12 May was £5,370 but this jumped to £5,673 by 30 June. This increase equated to receiving an extra £6,060 over the course of an average twenty year retirement.
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Scott Mullen director at My Pension Expert said the increase in the rate could be explained by the rise in gilt yields, which are intrinsically linked, to annuity rates.
Mr Mullen said it was significant that gilt yields were boosted in June as a result of comments from the Bank of England policymaker Martin Weale about interest levels. This has led the yields to reach their highest levels this year and the standard annuity rate has followed suit, he said.
Mr Mullen said: “The 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.
“Now is a good time for those in drawdown to re-evaluate their options, as this month’s increase could be the tipping point that persuades them to purchase an annuity.
“As they provide a secure income which lasts throughout the entirety of the annuitant’s retirement, they are the preferable product for most. That’s why if rates continue to rise we would also expect to see annuity’s popularity rise with them.”