Over the last month we have witnessed the continuing fall of level pension annuity rates, with the top rate coming down £48. This reduction, which follows a £60 fall in the top pension annuity rate during October, puts Aegon Scottish Equitable at the top of the rate table.
Leading annuity rates for smokers remained steady over the past month with Reliance Mutual maintaining first place after bucking the trend in November by increasing rates. They are still around £500 a year better than LV=, their closest rival.
Meanwhile, Prudential are in top spot with its inflation-linked rates, with a £131 rise to £3997. Most other leading annuity providers have cut rates, with Canada Life dropping rates by £88 to £3910, based on a 60 year old male. They were in top spot last month.
Annuity rates are likely to drop further if the Bank of England’s recent slashing of interest rates filters through to the bond market. Corporate bond yields have not declined as sharply as interest rates so far. This is probably a factor of the credit crunch we are witnessing, with yields needing to be high to attract investment.
In the long term, annuity rates are quite closely linked to changes in UK base rates, so despite the falls this month, rates are still quite attractive relatively speaking. This is very much the case for those individuals eligible for a smoker annuity rate.
