We try our best to keep you updated on changes in the pensions and annuities market through this website, as the growing number of ‘annuity news’ items testifies. This time it’s about annuity rates, and follows concerns that annuity rates might follow short-term interest rates in a sharp decline.
The bad news is that, predictably, annuity rates are sliding. They are down around 8% since their high point last summer, on the back of falling yields on the corporate bond instruments and gilts that insurance companies use to pay pension annuity income.
And, it is likely that annuity rates will drop further this year as yields continue to come under pressure. However, current rates still offer pretty good value, being around 7% higher than three years ago.
As annuities are written on more of an individual basis these days there is more scope for people to get increased annuity rates for the likes off ill health.
Smokers, and those with other lifestyle conditions, can also expect increased annuity rates via what is know as enhanced annuities, so all is not lost.
