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Retirees told to shop around for annuity

Retirees told to shop around for annuity

Category: Annuities

Updated: 27/10/2011
First Published: 20/04/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Retirees have been urged to shop around for their annuities, after it was revealed annuity rates continued to drop in the first part of the year.

Analysis of data from Moneyfacts.co.uk showed that annuity rates dropped by 0.58% between December 2009 and March 2010, having fallen by 1.64% between June 2009 and November 2009.

The news makes it essential that those approaching retirement make the very most of their pension pots when purchasing an annuity.

Indeed, on a £50,000 pension pot, MGM Advantage warns that on average, men who choose an enhanced annuity from the least competitive providers in the market rather than the most competitive providers could find themselves £2,297.60 worse off over the first five years of their retirement. The corresponding figure for women would be £2,237.40.

"We expect that annuity rates will continue to fall for some time, especially with the introduction of new regulation that could reduce rates by up to 20%," said Craig Fazzini-Jones, director at MGM Advantage.

"We strongly believe that those approaching retirement need to consider maintaining exposure to the stock markets in order to potentially generate better returns and negate the impact of inflation."

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