Annuity Rates UK – How Annuity Rates Are Calculated
Annuity Rates UK Guide…
Have you ever wondered why some people get higher annuity rates and some get lower ones?
Indeed, there is no such thing as a standard annuity rate for everyone. Rather, annuity rates in the UK vary per person, depending on a number of factors.
The biggest factor is life expectancy or mortality, which is basically how long you have left to live. The shorter your life expectancy, the higher your annuity rate will be.
Life expectancy, in turn, can be determined by several factors. These include:
- Age – An older age means a shorter life expectancy, which, in turn, means a higher rate.
- Gender – On average, men have shown to have a shorter life expectancy than women.
- Previous occupation – Having been in a hazardous line of work can also lower your life expectancy. Examples of hazardous professions include:
- Miner
- Operator of heavy machinery (such as forklifts, cranes and bulldozers)
- Construction Worker
- Chemical processor (or work in any facility where there is a risk of exposure to hazardous chemicals or radioactive substances)
- Law Enforcer
- Firefighter
- Truck driver
- Bus driver
- Nurse
- Physician
- Pilot
- Mechanic
- Factory Assembly Worker
- Physical health – Are you suffering from a medical condition? Whether it’s just a mild condition, like asthma, hypertension or diabetes, or a more serious, life-threatening one like cancer or stroke, you can qualify for higher annuity rates in the UK.
Previous hospitalization or surgery, using a pacemaker and being on regular medication can also be considered.
- Lifestyle conditions – Having an unhealthy lifestyle can also lower life expectancy, such as smoking and drinking excessively, and obesity, since these can lead to medical conditions.
The more of these factors working in your favor, the higher your annuity rate will be.
In summary, if you are 65, male, previously worked as a bricklayer, overweight and have COPD, you will earn much more than a 55 year-old woman who worked previously as a hotel receptionist and has a clean bill of health.
Aside from life expectancy, other factors that affect annuity rates in the UK include:
- Location – There is such a thing as postcode annuities, which means the area where you live can increase or decrease your rate, since those living in affluent areas have shown to have a longer life expectancy.
- Stock market trends – If you buy your annuity at a good time, meaning the interest rates, gilt yields and other economic trends are in your favor, then you can get a higher rate.
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