Inflation and Pension Annuities
January 31, 2010
The effects of inflation can in some circumstances have a profound effect on the income level from a pension annuity. For those who choose a fixed rate annuity, the annual income will be fixed for the rest of their life. This is a popular option as annuitants know exactly how much money they will receive until they die and so can plan accordingly. However, if there are sharp increases inflation over several years, the increased price of living may mean that many who have purchased a conventional annuity may have wished they had opted instead for an inflation-linked annuity.
Standard Life halt with-profits bonuses
January 30, 2010
Bonus rates from with-profits funds have been frozen over the past year for those who are policy holders with Standard Life. This impacts on over one million of those who have taken out a policy with the insurer. Margaret Flaherty from the company said that ‘while returns from equity markets have improved they are still some way off recovering from the preceding downturn.” Earlier this year, Aviva announced it was “holding or reducing” regular bonus rates for its savers.
Outlook bleak for With Profits Annuities this year
January 29, 2010
Those who have their money invested in with-profits funds are not likely too see higher returns in 2010 says the IFA. This is in spite of forecasts of strong performance on the stock market. Pension experts note that the adverse effects of the recession has meant that there have been cuts in with-profits bonuses. In fact these with profits funds are unlikely to grow in tandem with the stock market, which has seen gains in recent months. The lack of synchronicity will alarm those who have funds invested as well as those who are considering purchasing a with-profits annuity.
Level Annuity Rates increase
January 29, 2010
Level annuity rates have increased this year giving a real boost to the pension annuity industry. The provider with the best rate is Aviva who are now offering £6,420 a year, which equates to an extra £120 compared to what it was offering in December 2009. This is based on a 60 year male with a pension pot of £100,000.
Taking your pension early
January 28, 2010
The government will soon raise the minimum age at which you can take pension benefits from 50 to 55, which means if you are approaching this age and are considering taking your pension early you should act fast. Whist it may be tempting to cash in your pension pot and get your hands on the tax free 25% lump sum, it may not always be the wisest decision. Especially given the fact that average life expectancy is rising all the time. If you do wish to take your pension early, you can enjoy the lump sum and then will be obliged to procure an annuity or enter into an unsecured pension/income drawdown.
Open Market Option annuitants 50 times as likely to gain enhanced rates, Say ABI
January 26, 2010
Savvy annuitants who have had the wherewithal to shop around for an annuity (called using the open market option), are 50 times more likely to enjoy enhanced rates compared to those who stuck with their default provider. That’s according to data released by the ABI, who show just how important it is to try other providers before purchasing an annuity. Tom McPhail who works for the Pension Income Choice Association (PICA) said this demonstrated that there were “clear advantages” to the open market option.
Income Drawdown can be “unrealistic” says Annuity Direct
January 26, 2010
Those embarking on an unsecured pension, also known as income drawdown are being troubled by “unrealistic critical yields quoted by insurance companies”. That’s the view of annuity specialists Annuity Direct. They add that advisers are making assumptions that are not accurate and so those who choose this option could be ending up with substantially lower returns than first anticipated.
Annuity Rates fall 1.5% in last 6 months of 2009
January 26, 2010
MGM advantage have revealed that rates for annuities fell over the past 6 months of 2009 by an average of 1.5%. The fastest falling annuities are standard annuities, according to the latest annuity index. On average pension annuities as a whole fell 1.64% in the last six months of last year, but standard rates fell the furthest at 2.16%. The gap between the highest annuity quartile and the lowest also grew to 64%.
Pension Annuity rates increasing at the start of 2010
January 25, 2010
It appears that rates may be on the increase with several leading pension annuity providers increasing standard and enhanced rates at the start of 2010. This will mean an increase in retirement income for thousands of annuitants in the UK. Aviva has raised their standard annuity rates as well as boosting escalating annuities, which are tied to fluctuations in the RPI (inflation rate). On top of this Canada Life has raised its joint-life annuity rates by two and half percent as well as marginally raising its enhanced rates. At the start of 2010, Legal and General also raised their rates by 1%
Aviva raise Pension Annuity rates
January 24, 2010
Aviva, one of the leading pension annuity providers in the UK, has lifted its standard and enhanced annuity rates by between 0.25 per cent and 1.5 per cent. Pension specialist Darren Dicks said that the company had been responding to “upward gilt movements” as well as making changes in response to an increasing trend to use postcodes when making assessments. He added that this had allowed the company to raise rates and offer potential annuitants a better deal.