Strategic Finance
Annuity rates at all time low |
|
|
| Strategic Finance | |
| Written by Paul Williams | |
| Wednesday, 01 September 2010 | |
|
Retirement prospects bleak with report of low pensions annuity rates. The prospects of securing a comfortable retirement have taken a further blow with news that pension annuity rates have hit an all time low. Research from Investment Life & Pensions Moneyfacts has revealed that annuity rates have fallen steadily over the summer months following a spate of re-pricing activity amongst providers over the summer. The average rate for a male aged 65 purchasing a level without guarantee annuity (based on a £10K purchase price) has decreased by 6.3 per cent since last August. In other words, the average man aged 65 buying an annuity that does not rise in line with inflation can now expect an annual income of just £647 for every £10,000 he has saved. The equivalent female annuity has seen a 5.6 per cent reduction over the past year, so a woman aged 65 can now get an average income of £605 a year for every £10,000 of pension she has accumulated, 5.6% less than 12 months ago. The latest reductions mean that the average male annuity rate has dropped by a massive 45.5 per cent over the last 15 years, whilst female rates haven fallen by 41.8 per cent, Moneyfacts said. "With every passing month the outlook for those approaching retirement appears bleaker," commented Richard Eagling, Editor of Investment Life & Pensions Moneyfacts. "There has been a spate of annuity re-prices over the summer months which has unfortunately left rates at record lows. In a few months time the first baby boomers will hit retirement. Often perceived as the lucky generation, they are likely to face a rude awakening when they come to secure their retirement income via an annuity," he said. Eagling warned, "With gilt yields still low and life expectancy increasing we can expect annuity rates to fall further still. Tomorrow's pensioners face a desperate battle to secure a comfortable retirement." |
|
Digg it! 
del.icio.us 
Newsvine 
Reddit 
Stumble It! 
