At annuitysupermarket.com we like to keep you updated on the latest information on annuities and annuity rates. We are firm believers that everyone should shop around on the open market to find the very best annuity rates.
The Retirement Partnership managing director Steve Lewis offers a commentary on the latest annuity rates.
Since our last annuity update, annuity rates have continued their slide downwards. Our benchmark annuity (£100,000 purchase, joint life 2/3rds, man 65, women 60, level payments) was paying £ 6,080 per annum gross at the end of March but this is now down to £ 5,749 per annum a fall of over 5 per cent. During the same period the yield on long dated gilts fell from 4.48 per cent to 3.87 per cent. This is roughly in line with our rule of thumb which says that for every 100 basis points fall in yields, a level annuity will reduce by 10 per cent. Over this period yields have fallen by 60 basis points and the annuity income by 5.4 per cent.
Kevin Stelfox, Sales Director at annuity specialist Retirement Solutions said, “This kind of information is extremely useful, it does bring home the message that it is so important to shop around with your pension fund and not just buy your annuity from the pension provider you saved with. Everyone has the right to the open market option, but shockingly on a third of people use it, which is disappointing.”
Our own research at annuitysupermarket.com is that the difference between the best and worst annuity rates can be quite alarming, an example from today using research from assureweb, a 65 year old male, using a pension fund of £50,000 after taking tax-free cash, with a level annuity with no options and paid in advance would get £3,422 from the best provider Legal & General, but only £2,988 from the worst of eight providers, that amounts to 14% difference in income. This proves how important it is to shop around to find the best annuity rates.