Latest findings from the MGMAdvantage Annuity Index, which tracks the income paid on conventional and enhanced annuities, shows average rates falling by 2.13% and 2.29% respectively in just three months.
The 2.1% drop in overall average annuity rates between March and June 2012 also means that rates have fallen by 14% since June 2009, when the Index began.
MGMAdvantage distribution and marketing director, Aston Goodey, comments: “The impact of Solvency II and the billions of pounds being pumped into the British economy to buy gilts has affected annuity rates.”
He adds: “This, teamed with the forthcoming EU Gender ruling which, from December, will stop insurers paying men higher annuity rates, means that if you are going to buy an annuity – then you might wish to consider buying now before rates come down further.”
The Index also reveals the difference in retirement income between the top enhanced annuity rates and bottom standard annuity rates for those aged 65+ with a £50,000 pension pot. It currently stands at 43% for men and 46% for women.
Further findings include:
The average difference in the income paid between the top and bottom quartile conventional annuity rates for men is 14.53% and 17.25% for women (23.32% and 28.08% in March 2012 respectively).
In relation to enhanced annuity rates, the corresponding figures are 18.72% and 17% (22.10% and 20.59% in March 2012 respectively).
Given the overall trend for falling conventional and enhanced annuity rates, MGMAdvantage says the use of the Open Market Option is even more critical in shopping around to secure the best possible annuity rate.
Category: Insurance News
