Latest annuity rates show gulf of 30 per cent

The gulf in annuity rates between the top enhanced rates and bottom standard rates is 30%, according to new figures. The latest Annuity Index from MGM Advantage revealed the average annuity rate has fallen in the second quarter of 2014, by 0.72%.The average standard annuity rate increased slightly - up by 0.42% - while the average enhanced rate fell by 1.64%.Aston Goodey, sales and marketing director at MGM Advantage, said: "For people looking for a sustainable retirement income this data shows it always pays to shop around when looking for your retirement income."People who don't shop around could be missing out on thousands over the course of their retirement."It is a tricky time for advisers and their clients, who are perhaps still wondering what to do following the radical Budget proposals."{desktop}{/desktop}{mobile}{/mobile}Annuities have taken a major knock since George Osborne's reforms were laid out, even leading to some firms cutting jobs due to anticipated falls in sales.But annuity rates had their first monthly rise since the bombshell Budget announcements, new figures showed earlier this month.Number crunchers at the My Pension Expert website said the data seemed to indicate that the rates are in recovery.Commenting on the future for annuity rates, Mr Goodey said: "The market has already felt some pretty hefty punches, most of which meant downward pressure on rates."The light at the end of the tunnel was the positive impact of future increases in interest rates and subsequent impact on gilt yields, which should help to push rates up."However, the Budget changes these dynamics considerably. When demand for product falls, then prices tend to rise."We might also see the type of people who traditionally bought annuities change. "People with smaller pots may take the money as cash, while people with longer life expectancy might securing an income through an annuity."The net effect on the annuity pool could be to put further pressure on rates. "Although we haven't felt the full effect of the changing market dynamics, annuity rates are likely to flat line for a while yet."

Latest annuity rates show gulf of 30 per cent

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