The improvement in annuity rates seen last year should continue to benefit pensioners this year, says Annuity Direct managing director Stuart Bayliss.
Annuity rates increased by up to 6 per cent last year and a market review by Investment Life & Pensions Moneyfacts shows that although rates have fallen marginally over recent weeks, they still stand at their highest level for several years.
The review found there was a growth in the number of enhanced annuity products being offered, with existing providers LV=, Norwich Union and Legal & General set to be followed into the market by other companies this year.
Bayliss says: “Rates will be good value in 2008. People have psychologically got the idea that their funds have been decimated in the last six mon-ths. Consumers have mistakenhuge volatility in the stockmarkets with losing lots of money.I would say to them to get a valuation before assuming you have lost lots of money.”
Investment Life & Pensions Moneyfacts deputy editor Suzanne Greener says: “The increase in annuity rates over 2007 gives a significant boost to a market that has suffered substantial reductions in rates amounting to 30 per cent over the previous decade. It is vital that pensioners do not fall into the trap of assuming that their existing pension provider will offer them the best deal.
“What is more, if the predicted boom in enhanced annuities is fulfilled, it will be essential for pensioners either to take time to find the best deal for themselves to suit their individual lifestyle and health circumstances or to take advantage of an adviser’s expertise.
“Less savvy annuitants could suffer badly, particularly if the withdrawal of impaired lives from the standard annu-ity pool leads to conventional rates taking a further dive.”