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Six providers increase annuity rates

Six annuity providers have bucked the market trend and upped annuity rates this week despite significant downward pressure from Solvency II, expected inflation rises and a European legal ruling which could force providers to offer unisex rates.

Hargreaves Lansdown says its annuity index has risen for the first time since June, 2009, with a £100,000 pension fund now buying a 65 year old guaranteed annual pension of £6,428 compared to £6,291 a month ago. The providers which have increased annuity rates are Legal & General, Aviva, Just Retirement, LV=, Canada Life and Aegon.

However, pensions analyst Laith Khalaf suggests increases are unlikely to continue as Solvency II and the possibility of further quantitative easing hover in the wings.

He says: “Annuity rates have ticked up but this is not necessarily the start of a sustained trend. The case for them falling back in the near term is as strong, if not stronger, than the case for further rises.”

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