Retirement
Annuity rates continue to rise
Annuity rates continued to rise in July, providing a slight boost to people approaching retirement.
According to The Annuity Bureau all of the top providers increased their rates, reflecting the rise in gilt yields during June.
Legal & General maintained first place both for single and joint life raising its rates by over 2% to £5,432 per annum for a single life and £5,036 for joint life.
On a single life the company is now paying £270.96 more than second placed Canada Life which also increased its rate by 2.5%.
Aviva maintained its position in third place but increased its rates by more than the other providers with its single life rate increasing from £4,742 to £5,000 (5.44%) and its joint life rate from £4,584 to £4,822 (5.2%).
Prudential was replaced in fourth place by Standard Life which pays £4,702 for a single life annuity.
This is £730 behind Legal & General – a difference in income over a 20 year retirement of £14,600.
Despite the increase, rates have fallen by 15% in the past three years, according to numbers from MGM Advantage.
Retail Price Index linked annuities saw the biggest movements in July with rates among the top four providers increasing by 6.2% on average.
The biggest mover on a single life annuity was Standard Life whose rate increase of over 8% saw them take the top spot from Legal & General.
Richard Williams, director at The Annuity Burea, said: “It was pleasing to see standard annuity rates increase this month particularly the large increases in RPI linked annuities. This reflects the increases in gilt yields that occurred earlier in the year and which have now fed through into rates.
“Given the upward trend in rates some individuals may be inclined to wait to purchase an annuity in the hope that rates will increase further over the next few months. However, care needs to be taken in doing this as it could take many years to catch up on the income that would be lost now particularly if rates do not rise much further.”
All rates based on £100,000 Purchase Price, no guarantee period, payable monthly in arrears.
Example standard level annuity, joint life.
| Joint Life -50% Spouse’s Pension | Male Aged 60, Female Aged 57 | |
|---|---|---|
| Legal & General | 1 | £5,036.64 |
| Canada Life | 2 | £4,860.96 |
| Aviva | 3 | £4,822.44 |
| Standard Life | 4 | £4,318.80 |
Example of RPI linked annuity for joint life.
| Joint Life -50% Spouse’s Pension | Male Aged 60, Female Aged 57 | |
|---|---|---|
| Standard Life | 1 | £2,650.80 |
| Legal & General | 2 | £2,580.12 |
| Aviva | 3 | £2,398.20 |
| Canada Life | 4 | £2,393.40 |
source: The Annuity Bureau
