Scottish Widows has defended its annuity pricing after the provider was exposed as offering the worst standard rate to a healthy 65 year old with £18,000 to invest.
Last week, the Association of British Insurers launched its ‘Annuity Window’, an online tool which allows users to compare annuity rates from 27 different providers.
While the information provided by the tool is limited – it only shows the rates offered to 65 year old savers with £18,000 to invest and does not include all providers – it allows users to see sample rates from a wider range of insurers than was previously possible, including those who do not compete for new annuity business.
The tool shows that for a healthy 65 year old from Manchester who invests £18,000 in a single-life annuity, Scottish Widows offered the worst rate at £840 a year in July. This is 31 per cent lower than the best rate of £1,100 offered by Reliance Mutual.
Scottish Widows head of annuity propositions Mike Teall says the provider has improved the rates it offers to customers since the ABI collected data for the Annuity Window.
He says: “This survey is based on a very limited sample of price points. We are always looking to improve customer outcomes, hence our investment in an enhanced annuity, and you will see that in this area we are competitive for an £18,000 annuity.
“With regard to our rates for healthy customers, we have already put through a rate increase since these rates were collected and we will continue to monitor.”
Syndaxi Chartered Financial Planners managing director Robert Reid says: “If Scottish Widows cannot offer value for money it should make sure its pension customers buy an annuity from someone else.”