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Annuity Rates
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 applying to both males and females. 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.
Annuity Rates
 
 
  More annuity topics
  Annuity rates table - standard
  Smoker rates table
  Outlook for rates 2014
  Changes in the market
  Annuity rates chart
  Latest gilt yields chart
  15-year gilt yields
Annuity Rates Table - Standard

29 September 2014 last updated

Table 1 below shows standard annuity rates for 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 a single and joint life based on a central London postcode.
 
 
Single Standard Basis
Age Level rate
no guarantee
Level rate +
10-year guarantee
3% escalation
no guarantee
55 £4,855 £4,835 £3,019
60 £5,325 £5,290 £3,486
65 £5,987 £5,884 £3,984
70 £6,830 £6,595 £4,582
75 £8,040 £7,500 £6,060

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Joint Standard Basis
Age Level rate +
50% Joint Life
Level rate +
100% Joint Life
3% escalation +
50% Joint Life
55 £4,552 £4,342 £2,799
60 £4,992 £4,738 £3,178
65 £5,514 £5,187 £3,620
70 £6,179 £5,746 £4,175
75 £7,131 £6,550 £5,237

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Table 1: Standard pension annuity on a single and joint basis for August 2014


Table 1 Notes:

Annuity rates based on a central London postcode (other locations such as Peterborough or Liverpool could be up to 4% higher or Dundee and Newcastle could be 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 and joint life rates assume both are the same age.
 

Outlook for rates 2014

This review is by Colin Thorburn the founder of sharingpensions.co.uk who has eighteen years experience in financial services and is a specialist in pensions and annuities.
The following table shows where annuities should be relative to gilt yields although providers can take time to change annuities for marketing reasons:

What Next For Annuity Rates
Annuity Type Expected Change (short term)
  Standard basis
  annuity rates change 1.3% increase possible
  Smoker basis
  annuity rates change 1.0% decrease possible
  Impaired basis
  annuity rates change 1.0% decrease possible

The latest annuity rates would need gilt yields to remain consistently at 2.81% for a change to occur across the board in the short term.

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. Below shows the annuity rates and gilt yields over the last six years to date:

Annuity Rates Chart Annuity Rates Chart
Read the latest annuity rates review to find out if this is the best time to buy an annuity.
   
Annuity Rates Changes Annuity Rates Changes
Find out about the latest changes in annuity rates and if they are rising or falling.
   
15-Year Gilt Yields 15-Year Gilt Yields
The 15-year gilt yields have a significant effect on annuity rates which we update daily.


Changes in the market


Find out more details:
monthly analysis of annuities and gilt yields


Impaired annuity rates have increased by 1.8% from Liverpool Victoria, by 1.6% from Just Retirement and Partnership have improved their impaired annuity rates by as much as 1% for certain medical conditions.

The 15-year gilt yields have reduced to the lowest level for the year of 2.70% on 29 August threatening further falls in standard, smoker and impaired annuity rates. Standard annuity rates are lower at the end of September from Hodge Life by 1.3% even though yields have recovered slightly.

Standard annuity rates are lower by 2.3% across the board and enhanced annuities have reduced from Partnership and Liverpool Victoria after developments of the Ukraine crisis with sanctions, Middle East and Eurozone deflation risks of Quantitative easing.

Legal & General expect the UK annuity market to shrink in size from £12 billion to £2.8 billion. This could result in providers developing more flexible annuity products in the future or people considering fixed term annuities allowing them to take an income and receive a guaranteed fund back to consider their options again in the future.

The Chancellor George Osborne has been announced a radical change for pensions in the Budget allowing people at retirement more freedom to take their benefits in any way they feel is appropriate. This includes being able to take the full fund as a lump sum less tax rather than buying a pension annuity.

Find our more: radical Budget change for pensions

The US Federal Reserve has reduced their stimulus package by $10 billion to $35 billion per month. There is little change to gilt yields and it is likely that increases in interest rates by the Bank of England will have the greatest impact.

The Bank of England may increase interest rates from the current 0.5% level despite "forward guidance" policy to maintain rates until mid 2016 if the economy improves.

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. Interest rates are predicted by city analysts to increase to 0.75% in February 2015 and to 1.75% by the end of 2015.

Equity markets:
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 6,649 on 26 September 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 3.05% to 2.70% or 35 basis points points. Yields have improved since the August 2012 low of 2.02% and annuity rates are offering poor value to pensioners. On 26 September 2014 the 15-year gilt yields were at 2.81%.


Pension annuity

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
Diabetes

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.


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