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Annuity rates enjoy upturn, says Moneyfacts

Moneyfacts has reported a sustained upturn in average annuity rates.

The site found that, although annuities faltered slightly during the first three months of 2008, average rates have bounced back to stand just above those offered in December last year.

The average annuity rate for men in May was £629, up from December’s rate of £622. For women, the May average of £588 was also up on December’s average of £582.

The annuity market review carried out in December 2007 revealed that despite plunging returns of up to 30 per cent during the previous decade, average annuity rates had improved by 6 per cent during 2007 taking rates to their highest level in five years.

The number of rate changes during the past few weeks suggests that providers are keen to pass improvements onto annuity customers in a competitive market.

But, Moneyfacts warns that although annuity rates have recently enjoyed a period of relative growth compared with the previous decade, differences between the best and worst standard rates on offer can vary by as much as 20 per cent. Enhancements available due to ill health can significantly increase the income payable.

Suzanne Greener, deputy editor of Investment Life and Pensions Moneyfacts, says: “Although rates are at their highest level for some time, continued uncertainty in the economic environment means that there is no guarantee that rates will remain at this level.

“Equally, it’s essential that pensioner’s either take time to find the best annuity deal for themselves to suit their individual circumstances or take advantage of an adviser’s expertise.”

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