Research from My Pension Expert has revealed an increase in the best annuity rates available during the month of June, constituting the first time since the Budget announcement that figures have shown a monthly increase.
The new data seems to indicate a recovery in the annuities market following the pension changes that were announced in March.
Chancellor George Osborne changed the face of the annuities market by stripping away all caps and limits on drawdown in this year’s Budget.
In the most sweeping change, Mr Osborne announced savers would no longer face the 55 per cent penalty charge if they try to take the rest of their pension after their tax-free lump sum, but would rather be taxed at marginal rates - meaning as little as 20 per cent for most pensioners.
The move was presumed by many to have a huge effect on annuity providers, with savers effectively taking their whole pension as cash.
Share prices of many listed annuity providers nose-dived in the immediate aftermath of the announcement.
During the month of April My Pension Expert recorded a -0.217 per cent fall in the best standard annuity rate and a -1.323 per cent drop in the best annuity for someone classed as obese.
In May rates in other annuity offerings declined too, according to the firm’s research.
However, during the month of June, the standard annuity rate has gone up by 0.603 per cent, and the enhanced annuity rate by 0.592 per cent.
The smoker rate has gone up by 1.367 per cent, the obese rate by 0.951 per cent and the drinker rate by 3.325 per cent.
Scott Mullen, director at My Pension Expert said:“These findings show that the annuity market is starting to recover from what has been a very trying few months.
“No-one expected the degree of change that came with the Budget announcement and its revolutionary rather than evolutionary nature caught everyone off-guard. This month’s improvements could be the result of a number of factors.”
