Annuities provide a guaranteed income until you die, and recent ructions in bond markets are allowing providers to offer much better deals on these products.

Higher borrowing costs are a headache for the Government but also mean higher yields for institutions willing to buy UK bonds, known as gilts.

That enables pension firms to fund more attractive rates for people wanting a safe income from an annuity in old age.

Annuities are a large and long-term purchase and you can't change your mind afterwards, so they are not something to buy on on a whim after a market upset.

But if you were open to considering one anyway, perhaps to run alongside your invested pension fund, it is worth checking out current rates.

For £100,000 a healthy 65-year-old can lock in income of nearly £7,500 a year, according to best buy data - see below.

In the same scenario and for the same price, a single life annuity that rises 3 per cent annually and has a five-year guarantee period - protecting your cash immediately after purchase - can generate £5,400 a year.

The same person with with a spouse three years younger could buy a joint life annuity with inflation protection but no guarantee that provides more than £4,800 a year, according to the latest industry data from Hargreaves Lansdown.

What should you bear in mind when buying an annuity

Pension freedom reforms a decade ago have prompted most savers to keep their pension funds invested and live off withdrawals during old age.

Annuities were shunned for years due to poor rates and restrictive conditions, and after gaining a bad reputation on the back of annuity mis-selling scandals.

Now there has been a resurgence in annuity rates, here's what to think about when deciding if they would suit you.

- You might be able to get an 'enhanced' rate if you wait to buy an annuity until you are older and your health has worsened.

- You can think again about your invest-and-drawdown strategy, and buy an annuity in tandem or as a replacement source of income later, but you can't get out of an annuity once it is purchased.

- If you are healthy, the best rates are on single life, no inflation-link 'level' annuities, but the current cost of living pressures highlight how important it is to get some protection against rising prices.

- If you buy a single, not a joint life annuity, there will be nothing for your spouse if you die first, so consider what they will have to live on and discuss it with them before making a decision. Many widows and widowers discover their partner's annuity choice has left them with no income after their bereavement, forcing them to live on meagre state benefits.

- Consider buying an annuity with a 'guarantee period', which protects against the loss of all or most of your purchase money if you die shortly afterwards.

- If you need to buy a long-term care annuity or immediate needs annuity to cover your own or a loved one's care costs, and the money is paid direct to the firm providing care, that income will be tax free.

- You should shop around for the best deals. The free Government-backed Money Helper service has an independent annuity comparison tool here.

Time to buy an annuity? What do money experts say

'As the value of gilts falls the yield from them increases which pushes up annuity rates,' says Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.

'The turmoil in the bond markets has caused annuity incomes to soar, giving an extra boost to a market that has already enjoyed a stellar year.'

She expects to see interest in annuities continue to increase, but cautions that it is important to look before you leap, and that you don't need to annuitise all your pensions at the same time.

'You can take a flexible approach and annuitise in stages throughout your retirement as your needs evolve. This means your remaining pot can remain invested in income drawdown where it can grow while you get the potential to take advantage of higher annuity incomes as you age.'

Tom Selby, director of public policy at AJ Bell, says: 'Annuities languished in the doldrums throughout the 2010s, in part because gilt yields – which largely determine the rates offered by insurers – remained persistently low.

'The flexibility available for drawdown investors has also proven hugely popular since the pension freedoms were introduced in 2015.'

He says rates have improved dramatically since the Truss-Kwarteng mini-Budget, adding 'Annuities are likely to come on the radar for millions of retirees who previously might have dismissed them as poor value.'

Selby suggests people ask themselves five questions when choosing to go with an annuity or drawdown, or a combination to provide an income in old age.

1. How much do you value flexibility over security? 

2. Are you willing to engage with investing or would you prefer to take a hands-off approach? 

3. Could your income needs change in the future, because if they fluctuate then drawdown might be attractive? 

4. Are you in good health, because if not you might be able to get a better 'enhanced' annuity rate? 

5. What are your priorities on death - is it leaving money to loved ones?

Nick Flynn, retirement income director at Canada Life, says: 'Additional government spending, global uncertainty and higher taxes are all contributing to the recent increase in the cost of government borrowing.

'Whilst there are no cast iron guarantees, if this trend continues, then it's a strong possibility that annuity rates will be maintained or even increase in 2025.

'Annuities offer individuals security and a guaranteed income for life. However, it's important to seek the advice of an annuity specialist or regulated financial adviser who will be able to help you find the best annuity product for you, with potentially wider benefits for your spouse or loved ones included too.

'Either way, be sure to shop around for the best option as opposed to accepting your existing insurer's offer as the decision to purchase an annuity is irreversible.'