Compare annuity rates below which are only examples, based on a pension fund of £100,000 after the tax free lump sum of £33,333 has been taken.

Last reviewed: 31st January 2012

Age Males Females Joint 55 £5,037 £4,825 £4,747 60 £5,460 £5,183 £5,092 65 £6,015 £5,731 £5,549 70 £6,835 £6,533 £6,220 75 £8,143 £7,682 £7,176 Smoker Annuity Rates Age Males Females Joint 55 £5,885 £5,741 £5,501 60 £6,546 £6,247 £5,898 65 £7,386 £7,044 £6,512 70 £8,536 £8,204 £7,423 75 £10,320 £10,013 £8,675 The above are examples of the rates available. Click the following for the full standard tables and other annuity options.

For other annuity rate tables try the following;

best annuity rates smoker single rates standard single rates smoker joint rates standard joint rates with profits rates diabetes annuity rates purchased life rates impaired life rates immediate needs rates

Annuity rate notes:
The above example table shows the best open market option pension annuity rates for standard single and joint annuitants based on:

12-month trend 2011
For all annuitants retiring in May 2011 aged between 50 to 75 and purchasing single or joint life level pension annuities, they have seen a decrease in the income payable when compared to rates 12 months ago in May 2011.

The following tables show the latest conventional rates compared to last year (follow the link for smoker rates showing a 12-month trend). It is based on an original pension fund of £133,333 and after the tax free lump sum has been taken, £100,000 is used to purchase an annuity. The difference between the two years is shown in pounds sterling per annum. The percentage is the change from the annuity rate paid last year.

Male Rate Change Female Rate Change   55 £269 4.6%     60 £178 2.8%     65 £281 3.9%     70 £379 4.6%     75 £378 4.0%     55 £193 3.4%     60 £265 4.3%     65 £355 5.3%     70 £391 5.2%     75 £423 4.9%   JOINT, level annuity, 50% female spouse Joint Rate Change   Male 55 and Female 55 £266 4.8%     Male 60 and Female 60 £245 4.1%     Male 65 and Female 65 £289 4.4%     Male 70 and Female 70 £400 5.4%     Male 75 and Female 75 £451 5.5%   Annuity table - the annuity rate changes are based on £100,000 in May 2010 compared to May 2011. For annuities specific to your circumstances you should complete the free annuity quote.

Latest rates higher than 12 months ago   Latest rates lower than 12 months ago   £ Difference in pounds sterling (per annum)   % Percentage change from 12 months ago   nc No Change

Annuity protection
There is always the concern that the insurance company which provides the annuitant with a pension income could become insolvent at some point in the future and what would happen to the payments. It is therefore very important that some research is conducted regarding the financial strength of the provider and this can be offered by an IFA.

However, there is protection provided in legislation, and in particular the original protection for a policyholder was introduced in the Policyholder Protection Act 1975 (PPA 75) where the policyholder protection board (PPB) acts as an industry funded safety net when a UK insurance company becomes insolvent.

Under the Policyholder Protection Act 1997 (PPA 97) this protection covers a purchased life annuity and pension annuity. In the first instance the PPB must initially seek to transfer the ongoing policies of the insolvent insurer to another company. The PPB must ensure the policyholder will receive 90% of the future benefits from the annuity. The provision of the PPA 1997 has been incorporated in the FSA, applying from midnight on 30 November 2001 and is called the Financial Services Compensation Scheme (FSCS).

Specialist advice
Two thirds of people in the UK are retiring today only to accept a poor annuity income from their pension provider, when an open market option could have increased this income by up to 30%, worth thousands of pounds every year for the rest of their lives, simply by asking for the best annuity rates. It may be that other options such as pension drawdown or phased retirement would be more suitable than an annuity.

It is very important to purchase the right pension income because once bought pension annuities cannot be switched to another annuity provider, cannot be changed to a different type of annuity and cannot be altered in any way for the rest of the annuitant's life. Therefore if the annuitant could benefit from an enhanced annuity or impaired annuity, this option must be explored before buying the annuity.

Specialist advice does not have to cost the annuitant more money. The distribution costs associated with selling an annuity by an insurance company cover the cost of advertising or advice and amount to between 1.0% and 1.5% of the annuity purchase price. However, individuals that buy direct pay for this cost yet the pension annuity is sold on an execution only basis, passing on the risk that the annuity may not be suitable back onto the customer.

By receiving specialist advice from an IFA with an annuity and pension bureau, the annuitant benefits from the consumer protection provided by the FSA if the advice given was not appropriate. If you are unsure of the features and options offered with an annuity, or would like advice on alternatives to pension annuities such as income drawdown, phased retirement, With Profits annuities of even temporary pension annuities, you could benefit from advice specific to your circumstances and attitude to investment risk.

Future trends
Current annuity rates are at the lowest levels for the past 40 years. Some people may think that this means annuity rates are more likely to rise in the future. However, the pension income paid from pension annuity is dependent on a number of economic factors, and these suggest that annuity rates are likely to remain where they are today or fall in the future.

The long term rate of inflation in the UK is now under control between 1.5% and 3.0%. This reduces the yields from investments and gilts which are purchased by the insurance companies to pay annuity income to annuitants. The UK Government uses the gilt market to raise money to increase public expenditure. It does this by offering attractive rates of interest, but currently this money is not required.

The market expectation is that the UK will eventually joint the Euro. As the interest rates in Europe are lower than in the UK, this means that UK interest rates must fall to match that of Europe. The markets have already reflected this expectation in interest rates, so when the UK does join the fall in income to annuitant is not going to be significant.

In the past there was only a single annuity market where the early death of an annuitant resulted in a mortality profit for the other annuity holders. However, these annuitants are now selecting against the insurance companies by opting for an enhanced or impaired annuity, phased retirement or pension drawdown. This has the effect of reducing the mortality profit and hence the annuity rates.