The reduction, which follows a £60 fall in the top rate during October, puts Aegon Scottish Equitable on top of the rate table.
The leading smoker rates remained steady over the past month with Reliance Mutual maintaining its position after bucking the trend in November by increasing rates. The provider is still around £500 a year better than LV=, its closest rival.
Meanwhile, Prudential has scooped the top spot with its inflation-linked rates, with a £131 rise to £3997. Most other leading providers have cut rates, with last month’s leader, Canada Life, dropping rates by £88 to £3910, based on a 60 year old male.
Alexander Forbes director David Marlow expects annuity rates to drop further if the Bank of England’s recent slashing of interest rates filters through to the bond market.
He says: “Current annuity rates will come down further if the recent falls in interest rates feed through fully to the bond market – at the moment, Corporate Bond yields have not declined as sharply as interest rates. This is probably a factor of the credit crunch, with yields needing to be high to attract investment. In the long term, annuity rates correlate closely to changes in UK base rates, so despite the falls this month, rates are still quite attractive relatively speaking. This is particularly the case for those eligible for a smoker annuity rate.”