New figures show that UK pension annuity rates have fallen to an all-time low. Recent research from Investment Life & Pensions Moneyfacts has uncovered that pension annuity rates have slumped further over the summer, representing a significant blow to anyone looking to secure a comfortable retirement. The average rate for a 65-year-old man purchasing a standard level annuity without a guarantee period (based on a £10,000 pension fund) has decreased by just over 6% since August last year. The equivalent female annuity rate has fallen by over 5.5% over the past twelve months.

The latest reductions mean that the average male pension annuity rates have dropped a massive 45% over the last 15 years, whilst female annuity rates have decreased by nearly 42%. Richard Eagling, editor of Investment Life & Pensions Moneyfacts staed that with every passing month the outlook for those approaching their retirement appears bleaker.  He added that there has been a spate of annuity re-pricing over the summer months which has unfortunately left pension annuity rates at record lows.

Most people approaching their retirement buy an annuity with the hard earned pension fund they have built up over their working life. The annuity they buy then guarantees them an income, which they will receive every year up until they die. The rate attached to the annuity bought by an individual decides the level of income they will subsequently get from it. Therefore, depending on the UK annuity rates available to a retiree when they choose to retire, the real value of their pension fund may be seriously affected.

Different kinds of pension annuities offer different benefits and it is important that retirees choose an annuity that reflects their requirements. For example, some annuities are index-linked while others pay out on a level basis. In addition, we have enhanced annuities which can be suitable for people with medical conditions, or smokers. With such low annuity rates, you could be better off not buying an annuity at all. Alternatives exist, such as income drawdown, that might be worth considering. Your best bet may be to consult a specialist adviser to give you the help and advice you need.

When the time comes to buying an annuity, which pension annuity has the best pension annuity rates for your circumstances? It is important to remember that this is a once in a life time financial decision. Once purchased, your pension annuity cannot be transferred or exchanged and will be with you for the remainder of your life. With this in mind, the annuity which you eventually buy will impact heavily on your future financial well being and it is important that that you choose your annuity very carefully.

A pension annuity is a contract with an insurer which will provide you with an income for the rest of your life in exchange for the value of your pension fund. It is usually best not to buy an annuity from your existing pension provider without first making sure that they are offering you the very best annuity rates available. Buying an annuity directly from your pension company could result in you losing out to the tune of thousands of pounds over your lifetime and it is usually possibe to receive a larger annuity income from a different provider. Always check the annuity rates from a variety of annuity providers before committing yourself.

If you suffer from certain medical conditions you could qualify for an enhanced annuity rate of up to 30%, and possibly more if you’re seriously ill. This would represent the best pension annuity rates for you. If you are a regular smoker, have been hospitalised for a serious condition, have a current medical condition or are currently taking prescribed medication you could be eligible to an increased annuity rate. You do not have to have a serious medical condition to qualify for enhanced annuity rates.

Despite the predictions of growth for the UK economy, with pension annuities, pension funds are still continuing to fall. Yes, the value of the nation’s pension funds has fallen again over the last month. Pension funds in the UK have shrunk further over the past four weeks, with a 30 year old’s and 60 year old’s annual annuity income falling by an average of £518 and £358 respectively, according to recent research from Aon Consulting. These latest falls mean that a 30 year old paying 10% of a 25,000 salary to a defined contribution money purchase scheme with an existing fund of £15,000 would be on course to building up a retirement pot of around £19,500 a year. However, with many people paying in substantially less, a far smaller pension fund will be on the cards for many others.

The future financial conditions for 65 year olds is even more worrying to consider, with the predicted retirement income now below half of the adequate standard of living, with an annual income averaging just over £7,600. On such an income, even those who plan to retire abroad would struggle to achieve a decent standard of living. Richard Strachan, of Aon, states that although we have seen some improvement to this country’s economic circumstances in the past six months, pension funds pots are in only marginally better shape than this time in 2009 and due to the continuing volatility in stockmarket activity, pension annuities funds shrank once again during the last month.

Use our annuity calculator to get best UK annuity rates. Your quick quote will provide a good indication of the income you can expect for a single life with no annuity options on standard annuity rates, asssuming you’re in good health. If you require annuity options such as joint quotes, guarantees, increasing income or perhaps you have health issues that may improve your quote further, then we can get you more. There are five important points about your annuity quote. First, it is based on standard annuity rates, and doesn’t take into account your state of health. You could get up to 30% more income if you suffer from ill health, if you smoke regularly, if you drink alcohol regularly, if you’re overweight, or in respect of your previous occupation.

To see some examples of the higher levels of you could qualify for, take a look at the enhanced annuity rates page if you have ill health, or the smoker annuity rates page if you’re a regular smoker, and have been for the last ten years. The income shown in your annuity quote is for a single life only, on a level payment basis, with no guarantee period. You might wish to consider certain options such as an escalating income to help combat inflation, or a joint life annuity if you have a spouse or partner to look after financially after you’ve gone. Neither this annuity rates calculator nor any other annuity quote engine that’s out there can provide accurate annuity quotes taking into account your health or lifestyle because of the 100′s of different issues involved; i.e. there are over 1,500 medical conditions to take into account. Therefore, the best way to get an accurate annuity quote tailored to your specific needs, is to contact us and discuss your circumstances with one of our team of advisers. You can call us free on 0800 077 3510.

The Treasury wants the open market option for best pension annuity rates in the UK, and has issued an ultimatum to insurers. The new coalition government has issued an ultimatum to the Association of British Insurers (ABI) over its opposition to the utilisation of the open market option, according to information from Professional Pensions. Apparently, a well placed source claimed government officials had informed the ABI, whose overall membership includes a large number of annuity providers, to provide them with compelling evidence as to why the open market option shouldn’t become the default option for pension savers at retirement.

Hargreaves Lansdown’s Tom McPhail, the current chairman of the Pension Income Choice Association (PICA), said the Treasury had actually been very receptive to the organisation’s ideas on the open market option. He commented that although clearly nothing’s set in stone, the tone of the communication he’d heard from within the ABI suggests that all the relevant government ministers and Treasury officials have bought their argument that the open market option should be made the default option. He added that he he expects the ABI to attempt to pursue the status quo if it can.

An ABI spokesman stated that the ABI and its members are committed to making the process of shopping around using the open market option for the best pension annuity rates as straightforward as possible, adding that the ABI continues to work with its’ members, government and other organisations to help consumers understand the decisions they need to make when they reach retirement about their pension savings, and to improve the customer experience when having to make those those decisions.