The data reveals two distinct markets, with a 30% difference between the top enhanced rates and bottom standard rates. The gap between rates also evidences a two-tier market, with the difference between the best and worst enhanced rates at 7%, compared to 12% in the standard market.
Aston Goodey, MGM Advantage, commented:
"Following the strong rise in annuity rates throughout last year, rates were flat in the first quarter of 2014. This is in part due to gilt yields, as well as the returns available on corporate bonds."
"Given the uncertainty in the market at present, it is worth remembering that customers who are looking to secure a sustainable income for life face the same decisions as they did before the Budget, and are unlikely to get a different outcome now to post 2015. The cost of delay needs to be considered, as does the potential for annuity rates to go down in the future.
"Considering your options at-retirement involves some complex decisions, with the recent changes making this arguably even more difficult. People looking to navigate their way through and create a sustainable income should seek professional financial advice."
Commenting on the impact of the Budget proposals on annuity rates, Aston Goodey said:
"It is clear the Budget will have an impact on rates going forward, although it is too early to call how this will play out. We are already seeing reduced demand as some people are postponing decisions until April 2015. This could drive annuity rates down. However, the competitive open market providers are likely to compete even more aggressively for business which might lead to tactical pricing decisions and improved rates for enhanced customers."
