Annuity rates down 1.5% in six months

Annuity rates fell by an average of over 1.5% in the latter half of 2009, according to figures from MGM Advantage.

In its latest Annuity Index, MGM suggests annuity rates have been falling, with standard annuities seeing a faster rate of decline.

Average annuity rates fell 1.64% in the six months to 31 December 2009, with enhanced rates down 1.33%, while standard rates dropped 2.16%.

The difference between top quartile and bottom quartile income payments grew, up to 64% in the latest index.

Average enhanced annuities now pay around 22.7% more than standard annuities, compared to 21.5% in June 2009. This would mean an income difference over five years of £3,776 for the average man purchasing a £50,000 annuity.

Craig Fazzini-Jones, director of MGM Advantage, says: "There is a huge amount of volatility in the annuity market and rates are changing quickly.

"Choosing an annuity is one of the most important financial decisions you will ever make, and you owe it to yourself to seek professional advice to help you find the best deal for you."