The ABI Annuity Window is now up and running, showing the best and worst rates of their insurance company members.
The Annuity Window illustrates the gulf that exists between the best and worst rates, and how much pension savers stand to benefit from shopping around.
Laith Khalaf, head of corporate research at Hargreaves Lansdown, says: “The Annuity Window lifts the lid on just what rates insurance companies are providing. It is a positive step forward and is likely to lead to more pressure on those companies offering low annuity rates. It also illustrates how consumers can benefit from the simple step of shopping around at retirement. The keystone to improving pensioner incomes is encouraging more people to do this, which rests on improving the communications sent to pension members before they retire.”
The difference between the best and worst rate for a conventional annuity is 31 per cent, with Reliance Mutual offering the top rate and Scottish Widows offering the lowest, according to the Annuity Window (based on a level annuity for a 65 year old man, living in the Manchester area).
On a purchase price of GBP18,000 this means the difference between receiving GBP1,100 a year and GBP840 a year. Over a 25 year retirement that would be an extra GBP6,500 income paid out.
The difference between the best and worst rate for an enhanced annuity is 46 per cent, with Prudential offering the top rate and Friends Life offering the lowest, according to the Annuity Window (based on a level annuity for a 65 year old man, living in the Manchester area, who smokes and has lung disease).
On a purchase price of GBP18,000 this means the difference between receiving GBP1,778 a year and GBP1,214 a year. Over a 25 year retirement that would be an extra GBP14,100 income paid out
It is estimated that 70 per cent of people could qualify for an enhanced annuity, according to MGM Advantage.
