News
2016 set to be worst year ever for annuity rates
Annuity rates are on track for their worst year ever, according to analysis by Moneyfacts.co.uk.
It found the average annuity income for a 65-year-old man with a £50,000 pension had fallen by 15% so far during 2016 and by 14.8% on a £100,000 pot.
These figures easily surpass the previous biggest annual annuity income fall of 11.5% recorded in 2012, Moneyfacts said.
Insurers price annuity rates in relation to yields on gilts and corporate bonds. UK gilt yields have fallen to their lowest ever level of around 1% since the Brexit vote and and even dipped into negative territory in late June.
Richard Eagling, head of pensions at Moneyfacts, said: “2016 has been a truly awful year for annuity rates, with rates falling to all-time lows. This is particularly disappointing as the stock market volatility that we are experiencing has re-emphasised the importance of a secure lifetime income for many retirees.
“Unfortunately, record low gilt yields following the EU referendum result and a significant weakening of competition in the annuity market have all exerted considerable downward pressure on annuity rates during 2016.”
How to improve your annuity rate
These figures will come as a blow to people approaching retirement and considering their income options.
However, there are things you can do to get the best rate possible including: shopping around for quotes and not necessarily sticking with your pension provider, disclosing as many personal and health details as possible and seeking professional advice from a financial adviser.
For more, read our guide to getting a better annuity rate