The may have made it more expensive for the government to borrow, but it also means pensioners who have saved into a private pension will get more bang for their buck.

According to one expert, a pensioner who decides to use some or all of their pension savings to buy an annuity will have gotten a better deal today than they would have a week ago.

Annuities are insurance products that pensioners can use to buy income. They tend to be cheaper to buy when the yield on is higher.

If you have saved money into a pension and want to buy an annuity, you can effectively buy £190 more a year than if you bought your annuity seven days ago.

Rates have been increasing the last year, and the recent market turmoil means they are now 7% higher than they were in January 2024.

Hargreaves Lansdown said a 65-year-old who has saved £100,000 into their pension can now receive up to £7,425 a year from a single life-level annuity with a five-year guarantee.

This was up from £7,235 a year last week.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said 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.

"The latest data shows a 65-year-old with a £100,000 pension can now get up to £7,425 a year from a single life level annuity with a five-year guarantee. This is up from £7,235 a year last week and up a whopping 48% on the £5,003 that was on offer this time three years ago.

"We could see further income rises in the weeks to follow, and this could push incomes up to the highs we saw in the aftermath of the mini-Budget.

Morrissey said it is still important to think carefully before buying an annuity.

She said: "If you take the first quote offered without checking the rest of the market, you may find you've made a costly mistake. Using an annuity search engine can help you check the market quickly and easily before you make a decision.

"You also don't need to annuitise all your pensions at the same time if this doesn't work for you. 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."

Hal Cook, senior investment analyst at Hargreaves Lansdown, said it was likely there would be a surge in demand for shorter-dated gilts, but probably not for longer-term gilts with maturities far into the future.

"For example, the yield on the 2-year gilt at the end of December was around 4.37% but is now pushing 4.6%. And it was nearer 4.2% at the start of December. For the 5-year gilt, the story is the same - it was yielding about 4.05% at the start of December, 4.33% at the end of December and nearer 4.65% today.

"It's not surprise therefore that at HL last week, we saw a rise in gilt purchases, with the most bought in a week since October. Also worth noting that if these higher yields hold until early February, there is a gilt maturing on 30 January that a lot of retail investors have bought. It's quite possible that they'll simply reinvest the proceeds of that into another 2- or 5-year gilt at that point.

It's harder to tell for longer-dated gilts because their prices are more sensitive to yield changes precisely because of their longer maturity. And it is quite likely that this disruption/volatility will continue over the short term."