Pension annuity rates have stabilised somewhat but shopping around for the best annuity rates is still essential. In May the rates for level annuities did settle down after after several months of falling rates, and the top rate available from Norwich Union (soon to be Aviva) was unchanged at £6440 per annum for a male, aged 60, with a £100,000 fund.
Annuity rates for females also held firm, with the top rate from Norwich Union (Aviva) unchanged for the month at £6100 per annum for a 60 year old with a fund of £100,000. On the other hand, index linked rates continue to slide somewhat with Canada Life cutting its rate by £111 to £3769 per annum in May for a male, aged 60, with a £100,000 fund. The best inflation linked annuity income available fell by more than £150 per year in just two months.
Annuity rates for smokers on a level basis also stabilised in May with the top rate from Liverpool Victoria (LV=) remaining unchanged at £7506 per annum for the month for a male aged 60, with a £100,000 fund.
Commenting on this one industry experts said that the worst of the double whammy of falling interest rates and quantitative easing (QE) seem to have worked their way through the system of annuity quotes and the sharp falls in level annuity income seen in past months appear to have slowed which is good news for those nearing retirement. He added that as annuity rates have fallen it is even more important that people shop around for the best possible rates, and, in his experience, people could improve their retirement income by around 18% simply by using the open market option to get the best possible annuity rate.
Considering an individual over a thirty year retirement, this could mean up to £35,000 or more extra annuity income for a person retiring with a pension fund of £100,000. Well worth shopping around for, I would suggest!
