Annuity Rates, Annuities, Pensions, Divorce Annuity Rates Charts
Home News Annuity Rates Annuities Pension Annuity Impaired Annuity Annuity Quotes Pensions Divorce Resources

1 October 2012 last updated
Standard annuity rates now 1.5% lower income for pensioners

Pensioner income is another 1.5% lower as leading standard annuity providers reduce rates again, only two weeks after a similar decrease.

Standard annuity provider Legal & General and Aviva have reduced their rates with some pensioners experiencing a decrease of 3.4% significantly reducing the income they can expect at retirement.

Standard annuity rates are primarily based on the 15-year gilt yields and since the beginning of August 2012 when yields reached an all time low of 2.02% they have increased to 2.19% a rise of 17 basis points. Would would mean pension annuities should increase by about 1.7% to match the yields.

Over this time the rates for a male aged 55 on a single life level basis have now decreased by 5.2% and across the board all annuity rates are acting contrary to expected direction and suggests providers are re-pricing their rates possibly in expectation of the Unisex Rates due to the EU Gender Directive.

Annuity rates lower for pensioners
  More annuity topics
  October News 2012
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Providers in downward annuity rates cycle

The aggressive discounting of standard annuity rates could be due to providers anticipation of the EU Gender Directive being introduced on 21 December 2012 as they all compete not to offer the highest annuities at the detriment of pensioners.

As an example a male aged 55 with £100,000 could purchase a standard annuity in August 2012 with an income of £4,821 pa and by 20 September this has reduced by £255 pa to only £4,566 pa. According to the Office of National Statistics (ONS) a male aged 55 could expect to live for 26.0 years so over his lifetime he will have £6,630 less income from his pension fund.

For females the situation is even worse. A female aged 55 with £100,000 could purchase a standard annuity income of £4,637 pa in August 2012 and now this has reduced by £246 pa to £4,391 pa, however, for a female aged 55 the ONS expect her to live for 29.1 years so over her lifetime she will have £7,156 less income from her pension fund.

The above is unexpected as female standard annuity rates are being reduced as aggressively as male rates although it is expected that at some point female rates should increase slightly by about 2.4% with male rates decreasing by up to 4.7% for escalating annuities aged 70 although on average it is likely to be about 3.6%.

Pensioners can improve their income

The guaranteeed annuity can offer a level or escalating income at retirement for pensioners. This initial income could be improved by up to 30% using a with profits annuity or investment backed annuity if they are prepared to take more risk or have other pension income.

Alternatively an enhanced annuity could be purchased if there are lifestyle conditions such as high blood pressure, Cholesterol, are a smoker or are overweight. An impaired annuity can be considered if they suffer from poor health such as diabetes, heart conditions or cancer. Incomes are often 40% higher than the highest standard open market option annuities.

News related stories:
Smoker annuity rates decrease by 2% across the board
Retirement annuities reduced by 1.9% from leading provider
Annuity rates 5% increase possible but providers resist
Impaired annuity rates reduce over 2% by providers
Unisex annuity rates lower pensioner income
Annuity Rates
  Age Single Joint  
  55 £4,574 £4,142  
  60 £4,961 £4,610  
  65 £5,691 £5,238  
  70 £6,478 £6,098  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
  Annuity Rates  
Annuity Quotes
  Plan your annuity and get quotes from the 12 leading providers  
  free annuity quote Free Annuity Quotes
  annuity quote no obligation No Obligation
  annuity quote all providers From All Providers
  Annuity Quote  
  Annuity Rates News:

Annuity rates rise due to inflation fears
Gilt yields rise over 2pc 15-year gilt yields are up 28 basis points as investors expect rise in base rates
Annuity rates soar 19pc to high for 6 years
Annuity rates soar19% Annuity rates reach a six year high up 19% since January 2021 as gilt yields rise
Gilt yields rise 20 basis points
Gilt yields rise 20 basis points Federal Reserve to raise rates more aggressively with gilt yields up to 1.82%
Annuities are at a 3 year high
Pension annuities could fall with Omicron variant Higher gilt yields sends annuities to a three year high up 11.1% in the last year
Pension annuities rise 9pc over a year
Pension annuities rise 9pc Pension annuities rise almost 9pc as yields increase ahead of higher base rates

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook Page Twitter Page   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-22 All Rights Reserved