Retirees looking to buy annuity income may be disappointed

buying an annuity for a £10,000 purchase price. The decrease pushed the average annuity income to £401.65, down from £428.71 a year earlier, based on standard rates.

The pension freedoms, introduced in 2015, have given people a much wider range of options for how they use their retirement pot.

People buying an annuity may find they can get a higher retirement income from an “enhanced” annuity, if they have a medical condition. Not all providers offer enhanced annuities, so it is worth shopping around. Other than buying an annuity, they could draw down some of it to use as a retirement income, cash in all of it, or leave it untouched and allow it to continue growing, for example.

The Government-backed Pension Wise service offers free retirement guidance to over-50s. Rachel Springall, a finance expert at Moneyfacts. co.uk, said: “Retirees considering an annuity would be disappointed to see another fall in the average annual income for the third year, so it would be understandable for them to favour pension drawdown.

“Indeed, since pension freedoms were introduced in 2015, annuity income has fallen for five out of the six years. It would be wise for consumers to seek independent financial advice when it comes to their retirement plans and keep up with regular reviews of their investments and options.”