Annuity rates increase

Posted on February 12th, 2011 | Categories - Retirement

A slight increase in Annuity rates has been recorded.

Figures for Annuity rates have gone up again following the slight rise in January.

Annuity rates continued to improve between January and February, according to data revealed by Alexander Forbes Annuity Bureau.

Figures show that for a 60-year-old man with a £100,000 pension pot, Aviva offered the best rate – a £20 increase to to its annual rate of £6,170 was recorded between the first two months of this year.

The second best was Canada Life followed by Saga, which raised its rates by £80 to £5,960.

Aviva and Canada Life ranked at the top for RPI linked Annuities and Standard Life came third.

Gemma Goodman, head of operations at Alexander Forbes, said: “It is good to see annuity rates continuing to rise, even by a small amount. Annuity rates have been falling steadily in recent years as people live longer and inflation and the increased cost of living will clearly have a further negative impact on income in retirement. However, in spite of the pressures currently facing the industry, annuity rates between providers continue to differ widely”.

She continued: Proposed new EU equality legislation could have a huge downward impact on Annuity rates as it would mean life insurers can no longer use a customer’s sex to determine the cost of financial services despite the fact Annuity rates are primarily built around mortality and statistically women are likely to live longer than men”.