Standard Level annuity rates:
June saw little change to standard, level annuity rates and no change to provider positions for both Single and Joint Life annuities. Rates for Legal & General, Canada Life and Prudential remained consistent, whereas Aviva rates increased by approximately 1% for both Single and Joint Life annuities. Legal & General maintained top place paying £5,490.60pa and £5,099.52pa for Single and Joint Life annuities.
Standard RPI Linked annuity rates:
There was, however, a change to provider positions from the previous month for those offering RPI Single and Joint annuities. Standard Life reduced its rates by nearly 11%, whilst most other providers' rates remained consistent. This resulted in Standard Life dropping out of the top four altogether. Legal & General remained at the top of the table with no changes to its rates for either Single or Joint Life annuities, paying £2,984.04pa for Single Life and £2,620.68pa for a Joint Life annuity.
Enhanced annuities saw more significant changes during June. Whilst Reliance Mutual's rates remained relatively stable, an increase in rates by Just Retirement for both single and joint life annuities saw it jump to the head of the tables. Reliance Mutual dropped to third position in the Single Life table, with Scottish Widows also showing a 1.58% increase to take them into second place. For Joint Life rates, apart from a change by Just Retirement, other providers remained unchanged, with only Scottish Widows showing any material adjustments with an increase of 1.6%.
(All rates are based on £100,000 Purchase Price, with no guarantee period, payable monthly in arrears)
Richard Williams, Director, The Annuity Bureau from JLT, comments:
"It is no surprise to see rate changes from the top providers as they seek to increase their share of business, having been hit by the liberalisation of the pensions market. Following the Government's published response to their Freedom and Choice in Pensions consultation, providers now have a clearer picture of what the future landscape looks like and have already started to push forward with their new product ranges.
To help this product innovation, pension tax rules will be amended to allow providers to develop new retirement income products that are tailored to the needs of individual consumers. It is highly likely that the "annuity" is dead in name, but will live on perhaps as the guaranteed income element of a more flexible retirement income product.
We have always been strong advocacies of education and guidance in the run up to retirement, so the promise of impartial guidance delivered by partners including the Pensions Advisory Service (TPAS) and the Money Advice Service (MAS) is certainly welcomed. We strongly recommend those approaching retirement to seek similar independent advice so they too can take advantage of this reformed retirement process."
For more information on the latest annuity rates or retirement services please contact The Annuity Bureau on 0845 072 6774 or visit www.annuitybureau.co.uk.