Annuities could be making a “fight back” amid changes in interest rates, according to Canada Life, which has increased annuity rates for the 14th consecutive time this year.

As a result of the increase, a benchmark annuity of £100,000 will now pay on average an income of around £5,845 a year, around £1,303 a year (29 per cent) more than at the start of the year, when the same annuity paid around £4,542 a year.

In light of this, Canada Life retirement income director, Nick Flynn, suggested that annuities could be making a ”fight back”, with the market seeing significant positive moves, driven by the changes in interest rates and also the open market providers competing for business.

“This is not only healthy for the annuity market but also clearly positive for customers looking to get the most value from their pension savings while seeking a lifetime of income security,” he continued.

“As with any financial decision, take your time to consider your options and seek advice. With a significant improvement in rates over the past few months, annuities should be worth a second look.

"With the right shape and best rate not only will you guarantee a lifetime of income, but you can also protect your loved ones.”

Recent research showed that whilst there has been a rise in the number of people purchasing annuities in later life, many are still reluctant to buy annuities because they do not understand them.

Provider trust also plays a key role in this, as previous analysis found that more than half (54 per cent) of individuals aged 55 and over that are planning to purchase an annuity would not switch provider due to the trust they have in the company they are currently saving with.

Indeed, previous findings from Canada Life also showed that the average customer would need to receive an extra £500 a year in income before considering switching pension provider.

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