Annuity rates may have reached peak

ANNUITY rates have reached their highest levels for more than a year, which is good news for those with money- purchase pensions about to retire, writes Fiona Bawdon.

According to the Annuity Bureau, a specialist independent adviser, rates have risen by an average of 16.5 per cent since the beginning of 1994. There was a spate of rises among annuity providers last month. However, the Annuity Bureau's managing director, Peter Quinton, warns against delaying buying an annuity in the expectation of further rises.

'There are mixed feelings in the market about what is likely to happen,' he said. For example, Canada Life increased its rates several times in early September, only to make reductions later in the month.

'If you think inflation and interest rates are going to run away, you should hold on because that will mean annuity rates will also go up. If you feel the Government is going to be successful in keeping inflation low, it is very unlikely there will be much movement in annuity rates.'

The difference in rates offered by the top and bottom providers is as much as 28 per cent.

The Annuity Bureau 071-620 4090