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Level annuity rates steady but smokers’ rates plunge

Level annuity rates remained steady over the last month but smokers’ rates plummeted, research by Alexander Forbes Annuity Bureau has found.

Alexander Forbes found that the level rates for a 60 year-old male with a £100,000 pension remained stable through the last month, with Aviva offering the highest at £6,470 per annum.

For a 60 year-old female with the same pension pot, level rates also held steady, with Aviva again offering the highest at £6,130 a year.

But over the last 12 months level rates are down by around 8-9 per cent overall, as in September 2008 a 60 year-old male could have received £7,040 per year and a female £6,750.

Index linked annuity rates also remained unchanged over the month with Canada Life offering the highest rate for a male, aged 60 with a £100,000 pot at £3,754 and Aviva offering the highest rate for a female at £3,440.

Smokers rates plummeted over the month, as a male smoker, aged 60 with a £100,000 pot, took a toll, would have seen £526 wiped off the best available rate from LV=, which was slashed to £6,980 per year. Reliance Mutual now offers the best rate at £7,023.

Alexander Forbes Annuity Bureau director Tim Whiting says: “Smokers have been absolutely clobbered – it is enough to make even the most hardened smoker give up in retirement.”

He says: “People who have little choice but to annuitise should shop around for the best rates, but with long term annuity rates falling steadily, people with larger retirement saving should be considering all of their income options, including income drawdown or phased retirement.”

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