Superannuation savings have this year bought an annuity income that is a stupendous 14.8 per cent lower on average than in 2015 – the biggest in any case annual fall – according to Moneyfacts.co.uk.
The insurance products provide a set yout for the prop of a policyholder’s life – and used to be a good way for pensioners to guarantee and protect expected income.
Broken down by amount, a 65-year-old with £50,000 of savings can think a yout that is typically 15 per cent lower than concluding year, and 14.8 per cent lower on £10,000.
Richard Eagling, head of superannuates at Moneyfacts, said: “2016 has been a truly awful year for annuity tariffs, with rates falling to all-time lows.
“This is rticularly second-rate as the stock market volatility that we are experiencing has re-emphasised the importance of a snug lifetime income for many retirees.”
The fall in annuity income is in in behalf of related to lower interest rates and the Bank of England’s money-printing or quantitative easing proceedings that has pushed down government bond (or Gilt) youts, which persuade annuity rates.
Mr Eagling added: “Unfortunately, record low gilt give up the fights following the EU referendum result, the im ct of Solvency II legislation and a significant acceding of competition in the annuity market have all exerted considerable downward urge on annuity rates during 2016.”
Retirees considering buying annuities be suffering with now been urged to shop around to get the best rates.
Com ring exemplifies – rather than sticking with an existing pension provider for an annuity – can inflate income by as much as 20 per cent, according to advisory firm My Superannuate Expert.
Another option is to keep pension money invested in professed income drawdown products or by continuing to work.
Steven Cameron, superannuations director at Aegon, said: “With annuity prices at an all-time low and improbable to recover soon, people need to start thinking differently and shut in their options open.
“Putting off retirement, continuing to work and come to someones rescue will be an option for some.
“If people need a retirement income now, they could cogitate on opting for drawdown which allows people to keep their net invested in the markets and take an income.
“It’s a flexible approach, not locking them into settlements, but there is a trade-off with investment volatility having the potential to lessen the value of their savings. “Some providers are now offering a ‘guarantee’ election within their drawdown policies.
“This keeps people’s savings instated in the market, but provides a guaranteed income regardless of how the investment performs.
“Dissimilar to a traditional annuity, it’s not a one way bet and they can always withdraw their money.”