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ONS data shows 29% jump in cost of male annuity

Money

The size of pension pot needed to buy a male annuity has gone up by almost a third between December 2009 and March 2013, a report from the Office for National Statistics reveals.

The ONS Pension Trends report, published today, shows in order to receive an annual income of £5,000, a 65 year old single man would have needed a pension pot of £118,000 in December 2009.

To buy the same level of annuity in March 2013, he would have needed pension pot of £152,800, an increase of 29 per cent from December 2009.

Women have seen a 14 per cent increase in the size of pension pot needed to buy a £5,000 annuity, from £133,500 to £152,800. 

Annuity rates were equalised for men and women in December 2012 following the European Court of Justice ruling in March 2011 that insurers cannot price products based on gender.

The ONS has calculated the savings required to receive certain levels of retirement income based on data from its Wealth and Assets survey. Figures have been calculated using the best annuity rates available on a single life, inflation-linked basis using quotes from the Money Advice Service.

The data shows a £10,000 annual income required a pension pot of £305,600 in March, compared to  a pension pot of £236,100 for men and a pension pot of £267,100 for women to secure the same level of income in December 2009.

A £25,000 annual income required a £763,900 pension pot in March, up from a male pension pot of £590,200 and a female pot of £667,700 in 2009.

ONS pension trends table 2013 700
Source: ONS

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