MGM Advantage Annuity Index June 10

MGM ADVANTAGE ANNUITY INDEX REVEALS WIDENING GULF BETWEEN BEST AND WORST ENHANCED ANNUITIES

Thousands of pounds in retirement income being missed -

June 2010. The latest results from the MGM Advantage Annuity Index (‘Index’) reveal that the difference between the income paid on top and bottom quartile enhanced annuities is continuing to grow. It shows that over an average retirement, men could now be £10,129 worse off and women £11,351 worse off if they chose a bottom quartile enhanced annuity for their £50,000 pension pot.

The Index also shows that annuity rates have fallen by nearly 3% since June 2009.

This continual decline in rates was apparent during each subsequent financial quarter and highlights the importance of shopping around for the best possible annuity rate.

Between April and June 2010, the difference between the top and bottom rates paid by enhanced annuities for men was 16.78%, up from 12.5% between January and March 2010. For women, the difference increased almost 4% to 17.01% from 13.06%. For the first five years of retirement, men buying a bottom quartile enhanced annuity could be £2,152 worse- off and women £2,837. Worryingly, both men and women would now receive over £600 less in the first five years of retirement than they would have done just three months ago.

Craig Fazzini-Jones, Director at MGM Advantage comments, “There are significant differences between the best and worst annuity rates for conventional and enhanced annuities, making it more crucial than ever to shop around for the best deals.

“And, with annuity rates falling and likely to continue falling, it’s a good time to consider alternative retirement income solutions that can offer more flexibility than a fixed level annuity to maximise retirement income over the longer term,” said Craig.

Between April 2010 and June 2010 annuity rates fell 0.69%, compared to 0.57% between December 2009 and March 2010. The average rates on standard annuities fell by 0.99% between April and June this year compared to 0.50% between January and March, whilst enhanced annuities fell 0.38% and 0.65% respectively.

The difference between an average standard and enhanced annuity rate has increased from 22.7% for men in March to 24.09% in June and from 22.6% for women in March compared to 22.69% in June. For the first five years of retirement, this would mean a difference of £3,823.50 for a man buying an annuity with £50,000, and £3,407.65 for a woman.

Looking across both the standard and enhanced annuity markets as a whole, the difference between the top and bottom quartiles continues to widen for men but has reduced slightly for women. In March 2010, the average difference for men was 34.9% and this rose in June to 35.6%. The corresponding figures for women are 34.7%% and 33.8%.

£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	£3,173.78	£3,938.48	24.09%	£3,823.50	£12,999.90
Women	£3,003.79	£3,685.32	22.69%	£3,407.65	£13,630.60

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	£3,361.77	£2,931.19	14.69%	£2,152.90	£7,319.86
Women	£3,249.72	£2,739.70	18.62%	£2,550.10	£10,200.40

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	£4,146.83	£3,550.99	16.78%	£2,979.20	£10,129.28
Women	£3,903.78	£3,336.23	17.01%	£2,837.75	£11,351.00

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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
Sophie Woodcock 020 7282 1072
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 has recently launched a new and unique asset backed annuity - the Flexible Income Annuity, which will give customers the potential to receive a greater income than through a fixed level conventional annuity. The new product includes the flexibility to change income levels at different stages of retirement and the potential for growth and therefore the potential to negate the impact of inflation. It also provides a minimum income guarantee and death benefits.

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.