A decade of poor pension fund performance
December 29, 2009
Poor return from pension funds and the abolition of tax incentives has created an environment where saving for retirement is appearing less and less appealing. That’s the view of a leading corporate accountancy company. As an example, a UK pension pot of £100,000 will create annual annuity payments of £7,000 a year – which is £2,000 less than in the year 2000.
Pension Annuity Rates fluctuating adds more misery for retirees
December 23, 2009
The volatile state of the pension annuity market is leading some employees feeling confused, according to one pension expert. Richard Strachan from AON consulting oberved that annuity rates have been falling in 2009. In addition to this rates, have been fluctuating, adding further confusion those thinking about just when to retire. Many of those on the brink of retirement may be considering delaying retirement as they feel they will not be offered favourable rates.
Christmas Shopping in more popular than Annuity Shopping
December 22, 2009
Data revealed by Aviva has shown that the British public spend 26 times longer Christmas shopping than shopping for an annuity. We spend on average of three days, six hours and 35 minutes Christmas shopping, equating to six months over a life time. In comparison we only spend seven days looking for a pension annuity. Although alarming, it is hardly surprising given the lack of understanding surrounding pension annuities. Overall, the annual holiday is one of the most important purchases, with more than half of adults saying they would spend more than a week researching their holiday before booking, amounting to 311 days in a lifetime.
Why Smokers benefit from Annuities
December 21, 2009
If you have smoked 10 or more cigarettes a day for the last decade then it is likely that you qualify for what are known as smoker annuities. The reason why you should choose a smokers annuity is that it will be eligible for enhanced annuity rates, meaning you’ll get a higher annual income compared to a conventional annuity. In fact, you could increase your annual income by up to one fifth!
Annuity Rates increased as Gilt Yields increase
December 21, 2009
The fall in the value of gilts should see an increase in pension annuity rates, according to industry experts.
The initial reaction of the gilt market was unchanged due to the gilt issuance forecast remaining unchanged. However, there was no clear indication yet of how the state would cut public borrowing, currently running at £178 billion in 2009. This meant that investors were still unsure about the UKs AAA credit rating. They fear that, if the government does not take drastic steps to reduce the deficit, the state will be charged more to borrow money and thus reduce it’s credit rating.
Pension contributions fall in 2009
December 20, 2009
Contributions into personal pensions has fallen from £5.2 billion in 2008 to £3.91 billion in 2009. The Association of British Insurers (ABI) has blamed the fall on the recession, stating that those who would normally be saving for their retirement have had to use current income to live off. As well as the recession, some have argued that perceived high charges from insurance companies coupled with poorly performing investments has made savers skeptical about the whole process.
Annuitants should highlight any medical conditions to get the Best Annuity Rates
December 17, 2009
Annuitants should always mention any medical conditions, both past and present, when applying for a pension annuity. Failing to do so could mean them losing out on thousands of pounds of potential retirement income. Andrew Goodsell from SAGA that “It is vitally important that people are frank about health conditions when they buy a pension annuity, as it can improve their income for the rest of their life.
How do I get the Best Annuity Rates for my retirement?
December 17, 2009
Getting the best annuity rates is vital if you want to maximise your retirement income. Would you believe however that the amount of annuitants that use the open market option has fallen to 34% in 2009, down from 39% two years ago. Pension experts have estimated that UK pensioners could be losing out an aggregate total of £13.9 billion per year, the equivalent of £169 for each annuitant. This lack of “shopping around for the best rate” is driven by an obvious lack of understanding by those approaching retirement with a defined contributions pension pot. Whilst there is limited understanding of how an annuity works, there is even less awareness of the different types of annuity on the market in the UK (For a list of the main types of annuity on offer, check out our pension options page).
Annuities are a mystery to most, as the majority of people don’t think about them until they approach retirement. They can often be complex, making the desire to shop around even less appealing.
Enhanced Pension Annuities in 2009
December 17, 2009
2009 is set to be a bumper year for the sales of enhanced annuities, according to one pension provider. Although quarter three saw a 7% dip in sales of enhanced annuities, overall 2009 has been been very busy with sales of£1.3 billion by the end of quarter 3.
How much do I need to save for a Pension Annuity?
December 17, 2009
The question of how much money you need to save for your pension annuity will largely depend on your life expectancy and the lifestyle you will have come accustomed to. Two recent studies have shown that pensioners in the UK get a raw deal compared to many other developed nations, so don’t expect to much help from the state in retirement, other than the usual state pension. Figures from the ONS say that the UK has one of the worst arrangements for pensioners income when compared to previous salaries. Â Those who are saving for a pension who intend to buy an annuity may be wonder how much to save for an annuity?