Pension annuity rates have hit an all time low, new research from Moneyfacts.co.uk has revealed.
According to the personal finance information provider, pension annuity rates, after holding firm during the summer, have fallen steadily over the last two months.
It now means the average rate for a 65 year old male purchasing a level a without guarantee annuity – based on a £10,000 purchase price, has decreased by 3.3 per cent since September, while the equivalent female annuity has a reduction of 3.6 per cent.
Moneyfacts claims that the latest reductions mean the average annuity rate for a male aged 65 is now £625, down by 10.8 per cent on last year's figures, whilst female rates have fallen by 11 per cent to £585 since November 2008.
Analysing annuity rates over the past 15 years, Moneyfacts has also revealed that average male annuity has fallen by more than 45 per cent since 1994, with female annuities have seen a 42.4 per cent decrease.
Commenting on the latest rates, Richard Eagling, editor of Investment, Life & Pensions at Moneyfacts, said: "Given that the stock market recovery has recently boosted the size of many pension pots, it is disappointing that falling annuity rates have had an adverse impact on the retirement income that can be achieved.
"Part of the problem is the low gilt yields that we are seeing, which are still well below last year's levels."
Advising consumers to shop around for the best deal before purchasing an annuity, Mr Eagling also urged consumers to bear in mind that they are not required to purchase an annuity from the provider they had their pension savings with.
"With few signs that the recent spate of annuity price reductions is at an end, the priority must be to maximise the amount of retirement income received.
"The difference between the highest and lowest standard annuity rates can be as much as 13 per cent. The potential uplift for those in ill health who could qualify for an enhanced annuity is even higher," he added.
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