MGM Advantage Annuity Index Dec 09

MGM ADVANTAGE ANNUITY INDEX REVEALS FALLING RATES AND A LARGE DISPARITY BETWEEN TOP AND BOTTOM QUARTILES

December, 2009 – The MGM Advantage Annuity Index, which tracks the income paid on standard and enhanced annuities, reveals that between June and November, average annuity rates fell by 1.64%. The average rates on standard and enhanced annuities fell by 2.16% and 1.33% respectively.

As a result of this, the difference between an average standard and enhanced annuity rate has increased from 21.5% for men in June to 22.7% in November, and from 22.1% to 22.5% for women. For the first five years of retirement, this would mean a difference of £3,776 for a man buying an annuity with £50,000, and £3,425 for a woman.

£50,000 pension pot	Average standard annuity (per year)	Average enhanced annuity (per year)	Percentage difference	Difference over the first 5 years of retirement	Difference over average retirement
Men	£3,243	£3,982	22.7%	£3,776	£12,563
Women	£3,036	£3,721	22.5%	£3,425	£13,700

Further highlighting the importance of shopping around for the best possible annuity rate, the Index also reveals large disparities between the income paid on top quartile and bottom quartile products for both standard and enhanced products.

On a £50,000 pension pot, MGM Advantage warns that on average men who chose a bottom quartile enhanced annuity could find themselves £2,330 worse off over the first five years of their retirement. The corresponding figure for women would be £2,415.

Across the market as a whole the difference between the top and bottom quartiles has widened as standard rates in particular have fallen. In June, the average difference for men was 31.6%, but by November this rose to 34.7%. The corresponding figures for women are 33.45% and 34.12%.

Standard Annuities

£50,000 pension pot	Top quartile average rate (per year)	Bottom quartile average rate (per year)	Percentage difference	Difference over the first 5 years of retirement	Difference over an average retirement
Men	£3,464	£2,931	18.1%	£2,665	£9,061
Women	£3,238	£2,739	18.2%	£2,495	£9,980

Enhanced Annuities

£50,000 pension pot	Top quartile average rate (per year)	Bottom quartile average rate (per year)	Percentage difference	Difference over the first 5 years of retirement	Difference over an average retirement
Men	£4,146	£3,680	12.6%	£2,330	£7,922
Women	£3,929	£3,446	14%	£2,415	£9,660

Craig Fazzini-Jones, Director at MGM Advantage comments, “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. It could have a huge impact on the quality of your life in retirement.”

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Notes to editors:

(1) Annuity rates are based on analysis of data from Investment Life and Pensions Moneyfacts by MGM Advantage. The analysis looked at level annuities without a guarantee and income levels are based on a pension pot of £50,000 and a retirement age of 65. To create total retirement income figures the Index multiplied annual annuity income by 17 years in the case of men and 20 years in the case of women. Enhanced rate figures are from a sample of smoker rates and enhanced rates based on health conditions.

The Index based its life expectancy figures on Office of National Statistics figures.

For further information
Citigate Dewe Rogerson
Jonathan Henderson 020 7282 1057
Jo Skinner 020 7282 1092

About MGM Advantage
www.mgmadvantage.com

History: Based in Sussex, the life assurer opened its doors in 1852 as Marine and General Mutual Life Assurance Society, to fill the poorly-met insurance needs of seafarers and traders.

MGM Advantage is a new name in the UK retirement income market. Formerly known as MGM Assurance, the company rebranded as MGM Advantage, Designs for Retirement in June 2008 and repositioned the company as a retirement income specialist.

Its launch product – an Enhanced Annuity – is designed to provide additional income in retirement for people with any health conditions or a poor medical history and is distributed through financial advisers across the UK.

MGM Advantage is a mutual society owned by its members, and manages assets in excess of £1.4 billion. MGM Advantage’s commitment to customer satisfaction is backed up by an industry-leading customer charter, which promises high quality service and a £25 no-quibble payment to any customer who feels they haven’t receive the level of service they expected.

MGM Advantage Designs for Retirement, MGM Advantage and the MGM Assurance logos are Trade Marks of Marine and General Mutual Life Assurance Society.