The following shows examples of standard pension annuity rates. For the full list of rate tables try best annuity rates The annuities table is only a guide as rates change frequently. Please request a free annuity quote for an accurate income for you. Use this page also to see how annuity rates have changed, and effects of inflation on income while in retirement. comparing like for like? If you are comparing our free annuity quote to the illustration you have received from the existing provider, please remember to make sure the annuity details are exactly the same. Any difference could mean our quote figures can be improved when compared like for like with your provider's illustration.   • annuity rate tables • annuity protection     • standard rate examples • specialist advice     • 12-month trend 2008 • effect of inflation     • added feature costs • future trends     • annuity charges

annuity rates table
The standard rates shown below and only examples. For the full tables try the following;

These conventional rates are for a pension of £100,000 after the tax free lump sum of £33,333 has been taken.

Last updated: 23 November 2008

SINGLE, level annuity rates
Male single life	Female single life
male 50 £6,088     male 55 £6,465     male 60 £7,992     male 65 £7,717     male 70 £8,802     male 74 £9,924	female 50 £5,948     female 55 £6,251     female 60 £6,679     female 65 £7,304     female 70 £8,101     female 74 £9,012
JOINT, level annuity rates + 50% spouse
Male + Female spouse joint rates
male 50 and female 50 £5,875     male 55 and female 55 £6,173     male 60 and female 60 £6,579     male 65 and female 65 £7,153     male 70 and female 70 £7,938     male 74 and female 74 £8,836
The above are examples of the rates available. Click the following for the full standard tables and other annuity options.

Annuity rate notes:
The above example table shows the best open market option pension annuity rates for standard single and joint annuitants based on:

12-month trend 2008
For all annuitants retiring in July 2008 aged between 50 to 74 and purchasing a single or joint life level annuity, they have seen an increase in the income payable when compared to rates 12 months ago in July 2007.

The following tables show the latest conventional rates compared to last year (follow the link for smoker rates showing a 12-month trend). It is based on an original pension fund of £133,333 and after the tax free lump sum has been taken, £100,000 is used to purchase an annuity. The difference between the two years is shown in pounds sterling per annum. The percentage is the change from the annuity rate paid last year.

Key - Annuity Rate Changes

Latest rates higher than 12 months ago   Latest rates lower than 12 months ago   £ Difference in pounds sterling (per annum)   % Percentage change from 12 months ago   nc No change

standard - level annuity
male £ %     50 336 5.7     55 420 6.7     60 420 6.2     65 420 5.6     70 312 3.6     74 336 3.3	female £ %     50 364 4.5     55 348 5.7     60 396 6.1     65 396 5.6     70 384 4.8     74 384 4.3
Annuity table - the annuity rate changes are based on £100,000 in July 2008 compared to July 2007. For an annuity rate specific to your circumstances you should complete the free annuity quote.

standard - level annuity, 50% spouse

£ %     male 50 and female 50 252 7.2     male 55 and female 55 240 6.2     male 60 and female 60 264 6.1     male 65 and female 65 252 5.1     male 70 and female 70 240 4.1     male 74 and female 74 180 2.6

Annuity table - the annuity rate changes are based on £100,000 in July 2008 compared to July 2007. For an annuity rate specific to your circumstances you should complete the free annuity quote.

For example, for a 65 year old male with a single life annuity with a level income of £10,000 per year, a 3.0% rate of inflation will reduced the buying power of this money to £7,440 per year in real terms by the time he is 75 years old. If he lives to this age, the mortality statistics expect he can live for another 12 years, to 88 years of age. By then this income is going to be worth only £5,067 per year in real terms. If inflation rises above 3.0% on average, his income is going to be even lower.

However, the annuitant must remember that an annuity with RPI escalation reduces the initial pension income received, so for a 65 year old male given 3.0% inflation it would take almost 11 years before the income matches the level annuity, or considerably longer, almost 20 years to match the cumulative income paid.


Added feature costs
The annuitant can add extra features to a pension annuity depending on their requirements. The following table shows the costs associated with a number of main features, assuming that the annuitant and spouse are 65 years old, the income is on a level annuity basis paid monthly in arrears, no guaranteed period included and is without proportion. The cost of the added features will reduce £1,000 of pension income per year by the stated amounts.

For example, the cost to a female of adding a guaranteed period of 5 years will be £6, reducing her income from £1,000 per year to £994. For a male the cost would be £8, reducing his income from £1,000 per year to £992. This difference is due to the fact that male life expectancy or mortality is shorter than for a female and therefore represents a higher risk for claiming.

Also, for a female the cost of a 50% survivors pension is £77, reducing her income to £923 per year whereas for a male this is £140, reducing his income to £860. The difference is due to the fact that it is more likely a female will outlive her spouse and therefore the risk to the insurance company is higher where the annuitant is the male.


Annuity charges
By purchasing an annuity through an open market option, the current pension fund provider may make an administrative charge. However, the extra income secured far outweighs such costs. The other consideration is what costs are there from the new provider of the annuity.

To a certain extent this is not a consideration because when an annuity is purchased for the highest possible income, the capital now belongs to the insurance company. In general, the insurance company take 4% from the capital and this represents a charge for administration and to cover the distribution costs.

The distribution cost include such things as advertising, direct sales force or an intermediary such as an independent financial adviser (IFA) with an annuity and pension bureau, for selling their products and this is accounted for in the annuity quotes provided. Typically this cost is between 1.0% and 1.3% of the purchase price of the annuity.

Nevertheless, the extra income secured by an open market option, taking into account of all the cost, can be as high as 30% compared to the offer made from the existing pension provider. Many people buying an annuity direct are paying this charge on an execution only basis. This means that if it turns out the annuity is not appropriate, they have no option for complaint as they have effectively advised themselves.

Specialist advice from an IFA with protection provided by the Financial Services Authority (FSA) should be sought, as this will be paid for by the insurance company out of their distribution cost.

Annuity protection
There is always the concern that the insurance company which provides the annuitant with a pension income could become insolvent at some point in the future and what would happen to the payments. It is therefore very important that some research is conducted regarding the financial strength of the provider and this can be offered by an IFA.

However, there is protection provided in legislation, and in particular the original protection for a policyholder was introduced in the Policyholder Protection Act 1975 (PPA 75) where the policyholder protection board (PPB) acts as an industry funded safety net when a UK insurance company becomes insolvent.

Under the Policyholder Protection Act 1997 (PPA 97) this protection covers a purchased life annuity and pension annuity. In the first instance the PPB must initially seek to transfer the ongoing policies of the insolvent insurer to another company. The PPB must ensure the policyholder will receive 90% of the future benefits form the annuity. The provision of the PPA 1997 has been incorporated in the FSA, applying from midnight on 30 November 2001.

Specialist advice
Two thirds of people in the UK are retiring today only to accept a poor annuity income from their pension provider, when an open market option could have increased this income by up to 30%, worth thousands of pounds every year for the rest of their lives, simply by asking for the best annuity rates. It may be that other options such as pension drawdown or phased retirement would be more suitable than an annuity.

It is very important to purchase the right pension income because once bought an annuity cannot be switched to another annuity provider, cannot be changed to a different type of annuity and cannot be altered in any way for the rest of the annuitant's life. Therefore if the annuitant could benefit from an enhanced annuity or impaired annuity, this option must be explored before buying the annuity.

Specialist advice does not have to cost the annuitant more money. The distribution costs associated with selling an annuity by an insurance company cover the cost of advertising or advice and amount to between 1.0% and 1.5% of the annuity purchase price. However, individuals that buy direct pay for this cost yet the annuity is sold on an execution only basis, passing on the risk that the annuity may not be suitable back onto the customer.

By receiving specialist advice from an IFA with an annuity and pension bureau, the annuitant benefits from the consumer protection provided by the FSA if the advice given was not appropriate. If you are unsure of the features and options offered with an annuity, or would like advice on alternatives to pension annuities such as income drawdown, phased retirement, With Profits annuities of even temporary pension annuities, you could benefit from advice specific to your circumstances and attitude to investment risk.

Future trends
Current annuity rates are at the lowest levels for the past 40 years. Some people may think that this means annuity rates are more likely to rise in the future. However, the pension income paid from an annuity is dependent on a number of economic factors, and these suggest that annuity rates are likely to remain where they are today or fall in the future.

The rate of inflation in the UK is now under control between 1.5% and 3.0%. This reduces the yields from investments and gilts which are purchased by the insurance companies to pay annuity income to annuitants. The UK Government uses the gilt market to raise money to increase public expenditure. It does this by offering attractive rates of interest, but currently this money is not required.

The market expectation is that the UK will eventually joint the Euro. As the interest rates in Europe are lower than in the UK, this means that UK interest rates must fall to match that of Europe. The markets have already reflected this expectation in interest rates, so when the UK does join the fall in income to annuitant is not going to be significant.

In the past there was only a single annuity market where the early death of an annuitant resulted in a mortality profit for the other annuity holders. However, these annuitants are now selecting against the insurance companies by opting for an enhanced or impaired annuity, phased retirement or pension drawdown. This has the effect of reducing the mortality profit and hence the annuity rates.   Bookmark with: What are these?       resources   annuity pages   annuities   --------- select from --------- our services quotes & enquiries annuity directory your options open market option quote standard quote smoker quote diabetes quote impaired quote immediate needs quote with profits quote purchased life tax free lump sum with profits annuity smoker annuities diabetes annuities impaired annuity long term care immediate needs purchased life annuity annuity rates phased retirement income drawdown other annuity options annuity questions decision tree   --------- select from --------- advance or arrears annuity annuity quotes annuity rates annuity taxation anticipated bonus rate capital and interest capital protection complusory purchase deferred annuity enhanced annuity fixed rate escalation guaranteed period immediate needs impaired life level annuity medical conditions mortality mortality drag mortality profit open annuity open market option pension drawdown phased retirement purchased life RPI escalation single or joint life specialist advice staggered vesting survivors pension temporary annuity unit linked annuity with overlap with profits annuity with proportion   private pensions   pensions in retirement   --------- select from --------- appropriate pension buyout policy carry back relief carry forward relief FSAVC fund value insured pension money purchase pension fund pension term assurance personal pension private managed funds private pension scheme retirement annuity section 226 policy section 32 policy segmentation SIPP scheme stackholder pension   --------- select from --------- annuity annuity interest rate commutation compulsory purchase defined benefits defined contribution early retirement lump sum open market option pension drawdown pension withdrawal pension income phased retirement purchased life annuity retirement benefits staggered vesting tax free lump sum   employer pensions   pension terms   --------- select from --------- accural rate added years AVC approved scheme armed forces pension associated employers bulk transfer