You are here: Home - Retirement - Retiring now - News -

Annuity rates fall to record low

Written by:
Annuity rates have plummeted to record lows after months of decline, according to figures from Moneyfacts.

Average annuity rates, which determine how much income a pensioner receives in retirement, have fallen dramatically since August on the back of a sharp fall in gilt yields.

The latest drop in annuity rates means that the average annual pension income is now 1.2 per cent lower than its previous all-time low recorded in September shortly after the EU referendum.

The findings will be particularly disappointing to pension savers approaching retirement.

A 65-year-old with a pension pot of £50,000 would receive an average pay out of £2,237 if they bought a standard annuity today. The same person would have got £2,557 a year had they bought the annuity on 1 January.

Demand for annuities has declined since the introduction of pension freedoms in 2015, which give anyone aged 55 and over full access to their savings.

However, they are still the only product offering a guaranteed income for life.

Helen Morrissey, pension specialist at Royal London, said: “Once bought, annuities cannot be unwound and so anyone coming up to retirement needs to think carefully about whether now is the right time to purchase an annuity as their income will be locked in at this level for life.

“People have more flexibility now on how and when they take their retirement income and so it is worth speaking to an adviser about whether purchasing an annuity right now is really the best thing for them or whether they would be better off delaying the purchase in favour of using an alternative solution like income drawdown or even delaying taking a retirement income at all.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Mortgage wars heat up as Santander, Virgin, NatWest and HSBC slash rates

The ongoing mortgage rate reductions are heading towards a third month, with existing customers and new buyers...
Mortgage wars heat up as Santander, Virgin, NatWest and HSBC slash rates

Yorkshire BS launches 7% savings account – but there’s a catch

A regular cash savings account has been launched by Yorkshire Building Society paying 7% on a maximum of £500...
Yorkshire BS launches 7% savings account – but there’s a catch

Confused over monthly or annual savings interest? Here’s what you need to know

If you're looking to open a cash savings account, you may be asked whether you want interest to be paid monthl...
Confused over monthly or annual savings interest? Here's what you need to know

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Privacy Preference Center