Retirees who are finishing their working career are flocking to buy pension annuities before rates fall, pension experts have found. New EU rules that will soon come into affect, coupled with a collapse in the bond market has increased demand further. annuity rates are expected to fall soon as insurers and providers start to factor in the costs of the dramatic fall in bond yields over recent months.
Hargreaves Lansdown, UK financial experts say that rates had been falling on the back of falling gilt yields, but that they could start to fall more quickly in the next few weeks. Nigel Callaghan, pensions expert said that the”The surge in the stock market has seen many people bringing their retirement plans forward. Investors are nervous about fund values falling again and want to take risk off their retirement table.
Warnings are also being sounded by the FSA who say that rates could be effected by the new rules relating to the amount of capital used by insurers to cover annuities. This could push values down by as much as one fifth.
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