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

Annuity rates fall to record low

0
Written by:
10/09/2019
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.

Santander current account shake-up: Act now

From tomorrow, Santander will double the monthly fee on the 123 Lite current account while the cashback catego...
Santander current account shake-up: Act now

Countdown to new tax charge for freelancers and contractors

Freelancers and contractors have just five months to get ready for employment tax changes that will affect how...
Countdown to new tax charge for freelancers and contractors

SEISS ‘paid out more than £1.3bn to thriving businesses’

The Resolution Foundation claims the government’s £12.7bn Self-Employment Income Support Scheme (SEISS) has be...
SEISS ‘paid out more than £1.3bn to thriving businesses’

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

Read previous post:
The rise of the night-time online shopper

One in 15 (6.6 per cent) online purchases are made between midnight and 6am, according to the John Lewis Partnership...

Close