This is a free guide to find the best standard annuity rates for you with up to 25% more income for the new Unisex annuity rates on a gender neutral basis. Use the FREE annuity quote service to compare this to a fixed term or flexible income annuity, a higher pension income if you are a smoker or up to 40% more income for impaired health.
Read the latest daily updates on annuity rates and gilt yields that can help you make the best decision about when to buy your annuity. Timing could make a 20% difference to your income, up or down so make sure you read this review.
Your lifetime income depends on your pension fund size, annuity rates and price changes of the 15-year gilt yields so the timing of your annuity purchase can make a significance difference to your income.
The Unisex rates on a gender neutral basis are shown applying from 21 December 2012. This means that male and female rates are now the same. Make sure you review of annuity rates and gilt yields as well as using our quotes to compare the best annuities now and see if this is best time to take your pension benefits. Find out more from the following sections.
Annuity Rates Table - Standard 13 February 2014 last updated
Table 1 below shows standard annuity rates adjusted for the new Unisex rates on a gender neutral basis applying from 21 December 2012. It assumes a pension fund of £100,000 after the
tax free lump sum of £33,333 has been taken from the full fund of £133,333 for males, females and joint life basis are shown. These annuities are based on a central London postcode and other areas in the UK, such as Peterborough or Liverpool could be up to 4% higher or Dundee and Newcastle could be 5% higher.
Single Standard Basis
Level rate +
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Joint Standard Basis
Level rate +
50% Joint Life
Level rate +
100% Joint Life
3% escalation +
50% Joint Life
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Table 1: Standard pension annuity on a single and joint basis for February 2014
Table 1 Notes: Annuity rates based on a central London postcode (other locations in the UK can offer annuities 4% or 5% higher) using a purchase price of £100,000 - this assumes an original pension fund of £133,333 and after the
tax free lump sum of £33,333 has been taken. Income is gross per year (before deduction of tax) and payable monthly in advance for the whole of the annuitant's life. No medical enhancements are included in these annuities. The pension annuity table is only a guide as annuities
change frequently. Figures shown have been adjusted for Unisex annuity rates on a gender neutral basis.
We follow the progress of our benchmark annuity rate for a person aged 65 with a fund for £100,000 buying an annuity on a single life, level basis. The benchmark example uses a central London postal code (other areas in the UK would have incomes up to 5% higher than those shown). Below shows the annuity rates and gilt yields over the last six years to date:
Annuity Rates Chart Read the latest annuity rates review to find out if this is the best time to buy an annuity.
15-Year Gilt Yields
The 15-year gilt yields have a significant effect on annuity rates which we update daily.
The following table takes into account the new Unisex annuity rates introduced by the EU Gender Directive and where annuities should be relative to gilt yields although providers can take time to change annuities for marketing reasons:
What Next For Annuity Rates
Expected Change (medium term)
2.3% increase possible
0.5% increase possible
0.7% increase possible
The latest annuity rates would need gilt yields to remain consistently at 3.26% for a change to occur across the board in the medium term.
The US Federal Reserve has reduced their stimulus package by $10 billion to $65 billion per month. Due to the panic selling of equities in developing countries to safe havens such as bonds and gilts the 15-year gilt yields have actually decreased.
Poor US jobs data for the month of January was worse than expected sending gilt yields lower with equity markets and gilt yields are lower following uncertainty in emerging markets over liquidity. This has resulted in many developing country currencies falling significantly against the dollar, sending equity markets lower and investors seeking safe havens in US Treasury bonds and UK government gilts. Yields may continue to fall as this liquidity is being reduced by the US Fed tapering their stimulus.
Legal & General reduce their standard annuity rates by up to 2.0% on 22 January.
There are now opportunities for Impaired annuity providers to increased their rates as impaired annuityproviders are slowly improving their rates in January 2014 with Just Retirement raising rates by 1.0% followed by Liverpool Victoria and Partnership.
The Bank of England has kept interest rates at 0.5% until mid 2016 with the "forward guidance" policy although markets have immediately ignored this with further rises in yields.
Annuities for 2014-2016:
Annuity rates reached an all time low point in January 2013 with the Unisex Rates being applied. In the long term assuming the UK economy improves with interest rates returning to more normal levels, gilt yields would improve and this would mean annuities would increase although the process could take several years.
Many pensioners remain investment in equities at retirement and changes in the FTSE-100 index can make a significant difference to the pension income they will receive, up or down. The FTSE-100 index reached 6,000 on 30 June 2011 and is currently at 6,572 on 7 February 2014 increasing since the low of 4,944 on 4th October 2011. Purchasing an annuity can often take a month so to protect against volatility in the markets pensioners invested in equities should consider switching their fund to cash to avoid further decreases in their pension fund value or delay purchasing an annuity until the current crisis has stabilised.
15-year gilt yields:
The range for gilt yields last month was from 3.16% to 3.43% or a change of 27 basis points. Yields have improved since the August low of 2.02% and annuity rates are offering poor value to pensioners. On 7 February 2014 the 15-year gilt yields were at 3.26%.
Timing can make a 20% difference
These decreases are significant because if pensions are invested in equities since July 2008 the FTSE-100 index was 5,411 and at the beginning of July 2013 is up 804 points at 6,215.
In July 2008 a male pensioner aged 65 with £100,000 could purchase an income of £7,908 pa. By July 2013 annuity rates for our benchmark example are down £2,093 pa or 26.4% over this period.
Although equities are higher annuities are lower and the maximum income the pensioner could receive from the pension fund is now £6,679 pa resulting with a reduction in income of £1,229 pa or 15.5% over the last year. This is the effect of reduced pension annuity rates and fund value occurring over this time.
However, compared to September 2011, the FTSE-100 index was 4,944 and now up 25.7% with annuity rates are lower by July 2013. This means that in October 2011 a male pensioner aged 65 with £100,000 could purchase an income of £6,093 pa.
However, now in July 2013 equities and annuities have increased with a maximum income from the pension fund of £7,310 pa resulting with an increase in income of £1,217 pa or 19.8% over the year. This is the effect of increasing fund values occurring over this time.
A pension annuity can be a fantastic way to ensure a pleasant retirement, and by comparing annuity rates it is possible for you to increase your pension income by up to 25%. Being financially prepared for retirement is extremely important for you to live a comfortable and secure life and to ensure such an existence many people choose to buy a pension annuity. It is important to remember that this is an investment that has to last you for the rest of your life, so comparing annuity rates is highly advisable before you make your choice.
It can be difficult for some people to look ahead and consider planning for a time when you are not working, but it is an essential consideration if you want to enjoy as lifestyle that allows you some financial freedom. A pension annuity could allow you just that freedom and put you in a far better position to enjoy a much happier retirement, with less to worry about financially. Nobody likes the idea that money worries will be a problem when they are older so taking action now could be one way to securing a much brighter future all round, so do have a good think about where you want to be.
What do the Best Rates Depend On? There are a number of different factors that annuity rates depend on. For instance, the annuities will be different as mortality differs for a range of ages. Other factors that annuity rates are dependent on include the following:
• Smoker/non smoker – annuities can vary significantly between smokers and non smokers
• Illness – illness is another thing that can have a noticeable effect on annuity rates
• Care needs – annuity rates can also be affected if an individual has immediate needs such as care homes
• Impaired health
Because annuity rates can differ so much it is essential to compare annuities on the market to find one that will suit your requirements, and you can do that here at Sharing Pensions.
Of course, whilst we do try to secure the best annuity rates that we can they are reliant on a number of external factors which are beyond our or your control. This could include things such as the value of government bonds and gilts, Bank of England base rates and other monetary factors such as quantitative easing. We know that you will be interested in seeing details about annuity rates and how they have performed historically and you can find this information on our website. Our website is very helpful in this respect and lays out all the information you could require in a simple and easy to read manner.