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NU top in Alexander Forbes’ table of annuity rates

Norwich Union has come top for level annuities in Alexander Forbes Annuity Bureau’s table of the most competitive rates.

The insurer has improved its rate by £140 to £7,150 per year for a male aged 60 with level escalation purchasing a £100,000 annuity.

Alexander Forbes says Norwich Union’s rate displaced Aegon Scottish Equitable from the top position, as it improved its rate by £116 for an equivalent client to £7,144 per annum.

Legal & General remains top of the table for men’s index-linked annuities with its rate unchanged at £4,065, while Prudential is in the lead for women’s inflation-linked annuities with an improvement of £42 to £3,717 per annum.

But Alexander Forbes says that overall, inflation-linked annuity rates continue to disappoint with income remaining below the levels seen at the start of the year.

LV= is offering the leading rate for smokers annuities at £7,998 per year for a male aged 60 with level escalation on a £100k purchase, but Reliance Mutual is in the lead for joint lives.

Alexander Forbes director David Marlow says: “Intense competition is continuing to drive the annuity market, with further increases in level annuity rates this month and signs of life at last in the inflation-linked market.

“Where rates go from here however is very dependent on future interest rate movements – while the headline figures continue to rise we’re also beginning to see some providers shave some rates.”

Marlow adds: “We’re also seeing interesting developments in the smokers’ market. Not only are rates rising, but we’re also seeing a serious attempt to eliminate fraud with newcomer Partnership Assurance insisting on urine tests to prove how much annuity applicants smoke.”

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