Retirees are facing a fight to maximise their retirement income as annuity rates continue to slide, new research by Moneyfacts.co.uk has found.
Moneyfacts data made headlines in August when it was revealed that annuity rates had plummeted to an all time low.
Annuities are designed to ensure that retirees have a monthly income, but re-pricing activity saw rates fall over the summer.
Annuity rates have continued to decline, however, with average rates in September experiencing their biggest monthly fall since last October.
Over last month, the average annuity rate for a male aged 65 purchasing a level without guarantee annuity (based on a £10K purchase price) fell by a further 1.1% from £604 to £597. The equivalent female annuity rate fell by 1.2% from £568 to £561.
Part of the problem is that gilt yields, a major influencer of annuity rates, remain low at 3.04%.
"This latest fall in rates represents another hammer blow to the hopes that tomorrow's pensioners will secure a decent retirement income through an annuity," Richard Eagling, Editor of Investment Life & Pensions Moneyfacts, said.
"With rates unlikely to pick up anytime soon the priority must be for consumers to ensure they obtain the best price for their annuity. This will only be possible if they explore all of their options and utilise the much overlooked open market option."
Over the past 15 years, a combination of falling gilt yields and improving mortality rates has seen a 43% drop in annuity rates for males and a 42% drop for females. Despite this, recent research from Aviva found that four in ten people make no effort to shop around for an annuity, meaning they could be missing out on thousands of pounds over their retirement.
With rates falling once more, it is more important than ever to research and analyse your options before choosing an annuity in which to invest your pension pot. The easiest way to find the best annuity deals is to take a look at our annuity best buy charts or use an online annuity planner service such as that offered by Premier Retirement Services.
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