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Best Annuity Rates 2013

Compare the open market to secure the best annuity rates

Exercise your open market option and shop around for the best annuity rates. You can receive up to 35% more income in your retirement by doing so.

Complete the one-minute Annuities Comparison Form below to calculate an instant figure of what you may receive for your pension annuity (September 2012 updated).

best annuity rates 2012

LATEST: Best Annuity Rates – Updated September 2012

Annuity rates in September remained very consistent with those in August, a notable exception being Aviva’s options for smokers which decreased ever-so slightly. Annuity providers appear to be operating a cautious approach with high levels of uncertainty around the markets and particular the Eurozone crisis. Yields on government gilts, which have a strong influence on annuity rates, have been supressed by interest rates frozen at 0.5% and further quantitative easing measures by the Bank of England.


Annuity rates in 2012 are at all-time lows but this trend is unlikely to reverse any time soon unfortunately. Rates have been in decline for over twenty years, largely as a result of increasing life expectancies. However, the credit crunch and subsequent recession have accelerated this trend by causing falls in interest rates and yields from government gilts.

Most expert IFAs are advising that guaranteed annuities are currently unattractive and, perhaps, a thing of the past. With interest rates and inflation as they are, it would be unwise to lock in to a fixed rate for an annuity.

Comment from the experts

“The forecast for this years annuity rates is complicated”, says Geoff Alderton the chief editor of Annuities at Banking Times. “On the one hand, returns on gilt bonds are expected to increase if the global economy picks up as expected. On the other hand, however, EU legislation that would force insurers to hold greater cash reserves could mean providers put the pinch on rates.” Geoff provides more details in this link.

So what should you do?

If you are wondering if the best approach is to ‘wait it out’ in the hope that rates will improve soon, most industry experts would advise against this. Low annuity rates look like they are here to stay. In fact, new European legislation which comes in next year requires annuity providers to offer equal rates for men and women, and to hold more assets in government gilts is predicted to further decrease rates in 2013.

The best approaches are to shop around for the best available rates and secure the advice of an experienced Independent Financial Advisor who can advise you on the best options suited to your circumstances. You should also explore with them whether other options, such as Enhanced annuities or Income Drawdown are better suited to your needs.

Remember; there is no ‘one-fits-all’ best option as financial planning is very individualized to your own unique circumstances, from your age and demographic factors to your tax position. Only a qualified IFA can help you here.

To get an idea of the best annuity rates available to you, use the calculator at the bottom of this page.

Shopping around for the best annuity rates

If you are presently saving into a personal, stakeholder or money-purchase pension scheme you will likely have to purchase an annuity when you choose to retire. The current legislation in the UK requires you to convert the savings you have in your pension into an annuity scheme before you reach the age of 75.

There are substantial differences between the best and worst performing annuity rates options. It is essentially important that you consult with an Independent Financial Advisor and utilise the Open Market Option (more on this ‘golden rule’ further down the page). We can put you in touch with your local recommended annuities specialist IFA if you complete the form at the bottom of this page.

The Open Market Option: The Golden Rule of Buying an Annuity

Did you know that 65% of consumers in Britain still buy annuities from the provider that they first opened their pension plan with?. (Source: Reuters)

Unfortunately, many people are not aware that they can select from any annuity provider. The unpleasant truth is that this lack of awareness will have cost the vast majority of annuitants’ income in their retirement.

The single most important thing you must do when you are planning to purchase an income from your pension is to compare the entire market for the best options – this is what is known as your Open Market Option (OMO).

The prospect of researching the entire market and the individual providers may seem daunting. However, iAnnuityRates.co.uk has been established to provide all the information you need in one place and, through our Annuity Calculator and Compare Annuities tool you can get estimates on the income you can expect for your pension on the open market, as well as access to FSA qualified Independent Financial Advisors.

Explore your options

Remember: you are under absolutely NO OBLIGATION to purchase an annuity from your existing pension provider. It strongly recommended that you shop around for the best pension annuity options to ensure the maximum income in your retirement years.

Figures from the Association of British Insurers (ABI) reveal that an astonishing 61 percent of people who purchased an annuity in 2007 failed to shop around in this way. A lack of education when it comes to your finances and retirement planning can be extremely costly as it no doubt proved for many of these people who would have missed out on better options for themselves.

Do not allow this to happen to you or your loved ones. Ensure they explore the entire market to see all the options available to them before buying an annuity. This website is a convenient starting point to finding and comparing the best annuity rates.

Securing your best deal

There are sizeable differences between the level pension annuity rates offered by the various providers – this is why it is so crucial to exercise the Open Market Option. Get started with our annuity calculator below to find out what you sort of income you can expect from your pension annuity and to access free, no-obligation independent financial advice.

Post by James Daly

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