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.
Many pension experts have been disappointed by the recent findings given the fact that rises in the performance of the stock market has allowed pension pots to grow. Unfortunately this has not been matched with better rates for annuities. The problem is that there are low gilt yields, lower than they were last year. Many have blamed this on the Bank of England’s decision to print money, known as “quantitive easing”. With rates falling, it is even more an of imperative that annuitants shop round for the best deal and not take the first offer from their current provider.
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