Why are Pension Annuity Rates in 2009 lower?
November 26, 2009
Data from Investment Life & Pensions Moneyfacts has shown that pension annuity rates in 2009 are at “an all time low”, which is bad news for those approaching retirement. Rates had been holding steady over the summer period but they have now fallen down, meaning less income for those who purchase an annuity.
For a man aged 65 purchasing a level annuity for £10,000, the rate has gone down by 3.3% since the early Autumn, with same annuity equivalent for a woman falling some 3.6%. This has meant that the average pension annuity rate for a man has fallen 10.5% in the last 12 months. Female rates have gone down 10.9%. Looking long term, over the past fifteen years, the rates have fallen by as much as 43%, which is simply staggering.
Rules about being forced to buy an Annuity
November 24, 2009
With so much money being wiped off the vlaue of the stock market, ministers have considered changing the rules which stipulate that retirees must purchase an annuity by the time they are 75. We know that in 2010 the minimum age for buying an annuity will increase from 50 to 55, but some now believe that the government should go further and change the rules completely. Pension rules look like they will be shaken up by the Conservatives who are promising wide ranging pension reform should they be elected.
Get a better retirement income using the open market option
November 24, 2009
As a nation we are well accustomed to shopping around for the best deal, especially on so-called big ticket items such as cars, houses, holidays as well as financial products such as loans and car insurance. The credit crunch has only worked to increase the amount us Brits shop around for the best deal. Whole industries have sprung up comparing products and services.However one area that has not seen people shopping around is when its comes to finding a pension annuity. Experts say that only around 37% of people bother searching other pension providers. Given that you can significantly increase your pension income by doing this, it is quite remarkable.
How to get the best Annuity Rates
November 24, 2009
Here is a short video explaining about how you can get the best annuity rates. It’s by an American, so some the jargon is not relevant, but the principal is…
How to shop around for the best Pension Annuity
November 22, 2009
Shopping around for the best annuity is vital, we cannot underline this fact enough! It is staggering to find out that 66% of annuitants STILL don’t exercise the open market option, instead taking the first offer from their current pension provider. Why is this? Well, you go with what you know, why don’t more people move banks? Because they either think it will be too much bother, or in the case of pension annuities, they don’t understand the benefit of seeking an alternative provider. You could blame part of this on apathy, but with such a massive potential difference in pension annuity quotes to be had, misapprehension over the potential benefit is the main reason.
What is a Diabetes Annuity?
November 22, 2009
A diabetes annuity is a form of enhanced annuity, where the rates offered are higher than with standard annuities. This is because the life expectancy of the annuitant is lower, and so the pension provider will not be expecting payout for as long were the annuitant completely healthy. Surveys have shown that the average estimated age for a person with type 2 diabetes was 76.5 years compared with 81.5 years for someone without diabetes.
How does your postcode impact on your Pension Annuity?
November 22, 2009
Aside from your health and gender, where you live is also used by many pension providers when calculating pension annuity rates. Because of the discrepancy in life expectancy between wealthier and less privileged parts of the UK, a risk element is factored into the annuity calculation by some pension annuity providers. But some have argued that this means that people who live in areas with a higher level of life expectancy are effectively subsidising those who live in areas with lower life expectancy.
How accurate are the FSA Annuity Tables?
November 22, 2009
The Financial Services Authority or FSA publish pension annuity tables. These are updated daily and provide a guide for those seeking the best annuity rates on the market. Information is provided by the major pension providers and insurers, that is those who are willing submit their rates for publication, and not all providers do this.
One critic of the tables in their current format is Prudential Annuity representative Karin Brown who states that instead of showing the best individual deals, the FSA should merely focus on showing retirees the best options in retirement as well as showing them how to effectively shop around for an annuity.
Guaranteed Pension Annuity Payments and Inheritance Tax
November 22, 2009
Did you know that pension annuities that guarantee payments for a specific number of years can land the estate of the annuitant with an inheritance tax bill should they pass away. This important point was highlighted by LV= earlier this year, who said that in some instances this was being missed by pension advisers. Be clear however, that it is the guarantee payments that are in question, not that guaranteed annuity rates. If the insurance companies do not make discretionary guarantee payments, then the pension annuity could be in effect taxed twice.
What is an Indexed-linked Annuity?
November 20, 2009
An indexed-linked annuity, sometimes referred to as an inflation proof annuity is one which is linked to the Retail Price Index (RPI). Each year official inflation statistics are recorded, which are then used by pension providers to work out if the income of those annuitants that have an indexed-linked annuity should increase, decrease or remain the same.