Pensions 

‘Consumers need annuity education at retirement’

Rates for a single life smoker annuity jumped by as much as 6.28 per cent in December, according to the latest data compiled by the Annuity Bureau. Scottish Widows made the biggest increase to £6584.04 a year based on a £100,000 investment.

The provider also topped the table for rates on joint life annuities for smokers after raising the annual income it offered to £5932.80.

Legal & General pushed up income by £100 a year on single life smoker annuities, making it the highest-paying provider in the market for smokers at £6681.60. Reliance Mutual and LV= also lifted rates by 3.07 per cent and 2.41 per cent in December.

The latest annuity rate tables for January, compiled by the Annuity Bureau, found that Legal & General continued to offer the best rates on single and joint life annuities, paying out an average yearly amount of £5645.40 and £5209.80 respectively.

Prudential was the only retirement income provider to reduce rates on single and joint life annuities in the past month, cutting income by 0.26 per cent on single annuities to £4920.12, and 0.21 per cent on joint life annuities to £4624.08.

The biggest rate change in January was made by Aviva which raised single income by 1.81 per cent to £5293.56 and joint life income by 1.33 per cent to £4997.02, although it stays at third place in the table.

The data, based on compulsory purchase annuities for pension pots worth £100,000, showed L&G was streaking ahead of its rivals in rates offered on index-linked annuities by providing £3054 on a single life. Standard Life follows in second place with £2866.80 despite lowering its rates by 0.83 per cent in the last month.

Adviser

Dean Mirfin, group director of Lancashire-based Key Retirement Solutions, said: “There is not enough understanding of what an enhanced annuity is all about, nor do the general public understand that, unlike other areas of finance, actually disclosing all your health conditions and whether you’re a smoker is a good thing.

“But we also have to make sure that brokers’ indicative quotes that take certain medical conditions as a given to explain the figures provided fairly and honestly to consumers.”

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