Open market Annuity charges

Newly_retired

What are the factors which affect annuity rates in general ?( i.e. apart from individual circumstances and choices ). Is there any way of knowing whether now is a good time to take an annuity or whether it might be advantageous to wait?

dunstonh

Is there any way of knowing whether now is a good time to take an annuity or whether it might be advantageous to wait?

Only with hindsight.

What are the factors which affect annuity rates in general ?

age
sex
sole/joint (or 50% etc)
amount of fund value
indexation level
guarantee level
premium frequency
in advance or arrears
with or without proportion
previous occupations
health status
smoker status
capital buy back or not.

Not all providers consider the above. For example, many providers wont consider smoker status, health, previous occupations. All of which can potentially increase the level of the annuity.

Annuity rates are loosly linked to gilts (as that is where a lot of the money goes). However, overpayments in the 80s and 90s also reduced annuity rates at the turn of the millenium although they are beginning to work their way out as people die. There also appears to be a little bit of competition opening up on this front in recent times which wasnt there in the past. Providers seem to be buying annuity business which they werent keen on before. It's not a big profit area and many providers have ignored it or just offered an annuity on unfavourable terms not interested wether they get the business or not.

EdInvestor

I'd have thought gilt yields were the main thing to watch: there was a spike in the summer which enabled many people in drawdown to lock in higher income limits for the next 5 years Annuity purchasers also benefited. However interest rates are now poised to fall.

Are you sure that an annuity is a sensible way to go?Unless fairly old, drawdown may be a more sensible choice.