|Investment Property Worldwide.com||
Annuity rates have plummeted by almost four per cent in the past three months, tearing a huge hole in future pensioners’ incomes. It is the biggest fall since September 2010 and means that average annuity rates are down by almost one tenth since June 2009. Turmoil in the Eurozone has played a part by causing the returns earned on British Government bonds, known as gilts – on which annuities depend – to fall sharply.
A man aged 65 with a £50,000 pension pot would have been able to purchase a conventional lifetime annual level income of £3,224 in 2009. But today that has dropped to only £2,902.
Enhanced annuities, which pay an increased rate based on the reduced
life expectancy of the annuitant due to medical conditions, have slumped by an
average of 2.45 per cent since last September.
A £50,000 pension fund would now buy an enhanced level lifetime annual
annuity income of £3,583 for a 65-year-old man compared with £3,913 in 2009.
Figures provided by Andrew Tully, technical director at MGM Advantage,
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