Annuity rates are falling across the board, according to the latest figures from Alexander Forbes Annuity Bureau.
This month saw across-the-board falls in male single life annuities as providers again cut their rates. Table topper Aviva reduced its rate by £90 to £5,720 per annum, while second placed Canada Life cut its rate by £149.88 to £5,447.52.
A large rate cut of £206.04 to £5,356.68 per annum saw Legal and General drop from third place to fifth, allowing Hodge Life to move from fourth to third despite reducing its rate by £143 to £5,390.
Aegon Scottish Equitable also cut its rate to fall out of the top five, to be replaced by Friends Provident at £5,388.24. (All figures based on male, aged 60, level, £100,000 purchase).
Meanwhile, inflation-linked annuities were mostly down, although the picture was more mixed.†
Aviva remained in first place despite cutting its rate by £50 to £3,260, while Canada Life dropped to third place with a rate cut of £127.80 to £3,096.00 and Legal and General moved from fourth to fifth place with a rate cut of £203.88 to £2,830.08.
However, Standard Life increased its rate by a healthy £132 to £3,118.80 moving it from fifth place last month, to second this and AXA Sun Life held its rate stead at £3,054.00. (All figures based on male, aged 60, RPI, £100,000 purchase).
Keeping the trend of recent months, smokers rates remained largely static. Among the top five providers only Aviva reduced its rate, cutting it by £90 to £5,970. (All figures based on male, smoker, aged 60, level, £100,000 purchase).
Gemma Goodman, head of the Alexander Forbes Annuity Bureau, said: “We have now seen large falls in standard annuity rates for three months running, with Aviva alone wiping £400 off its male single life, level annuity rate since August.
“This is a worrying trend for those approaching retirement, especially when considering the impact of inflation, which hit a three year high of 5.2% in September largely due to rising utility bills.
“Given the recent hike in inflation, this month’s falls in inflation-linked annuity rates do not come as a great surprise. Expert opinion is mixed on whether consumer prices will continue to rise over the next few months, but with people living longer, inflation protection remains an important consideration when shopping around for an annuity.†
“Options, including incorporating RPI escalation under a conventional annuity and investment linked (variable) annuities, should be fully explored to ensure you are getting the best possible income in retirement for your individual circumstances.”
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