Falling rates for annuities is costing thousands of pensioners financially, according to pension specialists MGM Advantage. The Advantage Annuity Index has shown that income from standard annuities fell by 2.16% in 2009, with income from enhanced annuities falling by 1.33%. It also seems that rates have fallen slightly in quarter one of this year. This conflicts with information published earlier this year showing that level rates had increased at the start of 2010.
With rates falling many will again reignite the argument that people should not opt for an annuity but should consider other options such as an unsecured pension / income drawdown.
Craig Fazzini-Jones from MGM forecasted a grim outlook for potential annuitants saying that…“…we expect that annuity rates will continue to fall for some time, especially with the introduction of new regulation such as Solvency II that could reduce rates by up to 20%.”
He added that he thought that it was advisable for people to consider investments that are linked to the performance of the stock market to help alleviate the pressure of falling rates and the threat of inflation. In addition to this he said people should ”shop around to find the best solution”
Although rates are lower than in the past, an annuity is still a dependable, secure and predictable source of income for pensioners. There is plenty of choice and options available, so although rates are not as good as they have been, there is plenty of flexibility in the market to tailor your solution.
