Rising tensions in the Middle East could deliver an unexpected boost to retirement incomes, with some pensioners potentially ending up hundreds of pounds better off.
Market turmoil is now being tipped to push up returns for those turning their pension savings into a regular income in the coming weeks.
Financial uncertainty could offer a silver lining for savers approaching retirement, according to analysis from Moneyfactscompare.co.uk.
Annuities allow retirees to convert their pension savings into a guaranteed income, providing certainty over their finances in later life.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: "Pensioners looking to secure an annuity for a regular income could see a boost to the rates on offer in the weeks ahead."
She added: "Rising gilt yields have been known to cause annuity rates to soar. If this comes to fruition, it could mean retirees become hundreds of pounds better off."
Analysis from the financial comparison website shows that average annual annuity income now stands at £3,558, representing a £60 increase compared to March 2025 when the figure was £3,498.
The rise in gilt yields directly influences how providers price their annuity products, meaning rates could climb significantly in the near future.
Ten-year gilts have been trending upward over recent weeks, currently sitting at approximately five per cent.
Should this pattern continue, retirees could find themselves substantially better off, potentially gaining hundreds of pounds annually.
The rise in gilt yields directly influences how providers price their annuity products
| GETTYMs Springall noted that a similar situation occurred in 2022, when interest rate volatility and stock market uncertainty caused annuity rates to surge dramatically, with those purchasing in December that year receiving around £900 more per year on average than those who bought at the start of 2022.
Despite the potential for improved rates, Ms Springall urged pensioners to exercise caution rather than making hasty choices during this period of uncertainty.
"Seeking advice before making any rushed decisions is wise, no one knows how long the unrest will last," she said.
Personal circumstances can shift over time, whether through changes in health or evolving attitudes towards risk, making professional guidance particularly valuable.
Despite the potential for improved rates, Ms Springall urged pensioners to exercise caution rather than making hasty choices during this period of uncertainty
| GETTYMs Springall explained: "Circumstances can change, such as a deterioration of health or a change in someone's risk preferences, so an annuity may be a suitable option to provide a guaranteed income during retirement."
For those seeking greater flexibility, combining an annuity with drawdown arrangements remains an option worth considering.
Recent data from the Association of British Insurers reveals growing appetite for annuity products, with total premiums paid into individual pension annuities climbing four per cent annually to reach £7.4 billion in 2025, the highest level since pension freedoms were introduced in 2014.
Those with health conditions that may reduce life expectancy could qualify for enhanced annuities offering higher rates
| GETTYLarger purchases have seen particularly strong growth, with annuities exceeding £250,000 rising by 31 per cent year-on-year and those above £500,000 jumping by 54 per cent.
Escalating annuities, which increase payments annually to protect against inflation eroding income over time, have also gained popularity, with sales rising 10 per cent in 2025 compared to the previous year.
Those with health conditions that may reduce life expectancy could qualify for enhanced annuities offering higher rates.