Annuity rates have climbed again meaning a 65-year-old with a £100,000 pension pot should be able to buy an annuity income of up to £7,144 per year, up from £7,027 two weeks ago and an increase of 20% on the same period last year.

The last time annuity rates were this high was in November.

The prospect of further interest rate increases could mean further rises in annuity rates, said Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.

She said: “Annuity rates continue to head skyward, up more than £100 per year in just the last two weeks and a whopping 20% on this time last year.

“After being relegated to the sidelines after Pensions Freedom and Choice, annuities are once again taking centre stage and attracting more notice.”

She said the increase was likely to be in response to the looming rate rise expected this this week.

Interest rates are one of the factors that determine annuity rates and while it is by no means a certainty, annuity incomes have increased in line with interest rate rises over the past two years.

Ms Morrissey said: “Though they have dropped in popularity in recent years annuities should always be considered where there is a need for guaranteed income in a retirement strategy.

“We could see further increases in the coming months, but this is not a given.”