The difference between the best available standard annuity rates and enhanced annuity rates has fallen by 10 per cent over the last ten months, according to new research.

New findings from My Pension Expert show as at July this year, someone eligible for an enhanced annuity rate would be offered an additional 16.93 per cent compared to the standard rate - a ten per cent decrease on the extra 26.11 per cent offered in September 2013.

Further, the top enhanced annuity rate has fallen by 3.96 per cent, compared to the standard annuity rate which has risen by 3.75 per cent.

This comes as a result of "differing fortunes" of the two rates during the ten month time frame, the firm said.

My Pension Expert compared top rates for someone in perfect health versus someone with high blood pressure and high alcohol consumption. This was then applied to the criteria of a 64 year old with a pension pot of £10,000 looking to purchase a single life annuity.

The firm's director Scott Mullen said the “tightening” gap between standard and enhanced annuities demonstrates what a “volatile” place the annuity market is.

“With numerous factors affecting the outcome, rates can change drastically on a daily basis and what could have been the best option yesterday may no longer be today,” Mullen said.

“This is why advice when considering your retirement options is essential. Despite this news, the difference between the best and worst rates remains around 35 per cent and a wrong move could end up costing thousands.”

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