- It’s a good time to fix an annuity before rates start falling
- Rates are past their peak but annuities remain good value for money
- Combining one with drawdown can increase your returns in the long term
After a few years of relative insignificance, annuities have come back to the fore in the past two years, as rates have become increasingly attractive. Rates remain relatively enticing at the start of 2024, but that could change over the next few months.
Annuity rates are closely tied to interest rates because providers invest the money in fixed-income securities. The chart below underlines this – the spike in late 2022 was just after Liz Truss’s mini Budget and the corresponding increase in gilt yields.