Annuity rates in February have continued to rise following the jump in rates in January, the Alexander Forbes Annuity Bureau has revealed.

Comparing annuity rates for a male, aged 60 with a £100,000 purchase, Aviva offered the highest rate, increasing by £20 to £6,170pa compared to the previous month. Second was Canada Life, which kept its rate steady at £6,038 and Saga came third, having raised its rates by £80 over last month to £5,960. Aviva also came top when comparing RPI linked annuities raising its rate £10 on last month to £3,590.

Alexander Forbes also found rates for smokers have increased for the second time this year, with the highest being LV=, offering £7,022, up £207 on January.

Commenting on the findings, Gemma Goodman, head of operations at Alexander Forbes Annuity Bureau, said: “It is good to see annuity rates continuing to rise, even by a small amount. Annuity rates have been falling steadily in recent years as people live longer and inflation and the increased cost of living will clearly have a further negative impact on income in retirement. However, in spite of the pressures currently facing the industry, annuity rates between providers continue to differ widely.”

Goodman also warned that proposed new EU equality legislation could have a huge downward impact on annuity rates, as it would mean life insurers can no longer use a customer’s sex to determine the cost of financial services.

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