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New ABI annuity comparison tool reveals up to 46% difference in rates

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The ABI’s new annuity comparison tool reveals huge differences between the levels of income available from different providers.

For example, someone with health problems may be able to get a 46 per cent uplift depending on the enhanced annuity they choose, while standard annuities can see differences of over 30 per cent. 

Launching today, the Annuity Window does not give live annuity rates but instead a snapshot of example rates offered by the ABI’s 27 members based on 12 example customer profiles.

For a single life annuity for someone who has smoked for at least ten years (lung disease – severely impaired), Prudential pays the highest, at £1,778.23, 46 per cent higher than the £1213.59 paid by Friends Life.

A healthy 65 year old from Manchester who retires with £24,000, takes a 25 per cent tax free lump sum and is left with £18,000 to annuitise could get between £840 and £1100 a year, a 31 per cent difference, depending on provider choice. Other profiles cover people who are single or married, live in a variety of locations and a range of other factors which affect annuity rates.

Lloyds Banking Group brands Scottish Widows/Clerical Medical/Halifax provided the lowest rate in the example while Reliance Mutual provided the highest. 

For a joint life annuity for a 65 year old who has smoked for more than 10 years (high body mass index), £18,000 would get you £1,041 with the highest rate provider, LV=, 22 per cent more than the £852.37 they would get with the lowest rate, Prudential.

For a single life annuity in the same circumstances, Partnership pays the highest, at £1,277.76, 30 per cent higher than Prudential the lowest rate of £979.52.

For a 65 year old with £18,000 who has suffered a major stoke, LV= pays the most with £1,262, 29 per cent higher than Prudential which pays £979. 

ABI head of savings, retirement and social care Yvonne Braun says: “People will be able to see at one glance the sheer range of outcomes and the real difference medical issues and other factors can make. However, advice is still very important, we cannot solve everything, we are just doing our bit.

Annuity Direct director Alan Higham says: ”To continue to trumpet about these things helping people when they really don’t is a last gasp attempt to reduce the chance of severe regulatory action.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Simple, Dont permit projections within 3 months of retirement provide just the current fund value and tell them they now have to investigate/take advice.
    A lot better than standard annuity options and a web tool. FCA need to act on this and soon.

  2. Funny how a major bank with loads of innocent clients is able to get away with the worst rates on the market.

    Clever pricing or profiteering. I know what I think.

  3. …but we know that this disparity exists so why are we focussing on telling people the annuity rate gap is still with us instead of highlighting, re-highlighting and re-re-highlighting the importance of knowing all your options (not just an annuity – more than 1 way to derive an income in retirement) and the importance of advice.

    Do they write these things so people can get their name into the column inches?

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