Annuity rates could soar as a result of a hung parliament, according to MGM advantage.
A rate rise has been predicted following the news that the UK is facing a coalition government as a result of yesterday’s general election, which provided no clear party majority.
Unlike the rest of the UK economy annuities could do well out of the indecision in government. While investors have panicked, causing a fall in gilt prices and a rise in yields, MGM Advantage believe this may have a positive impact on annuity rates.
News of any annuity rate increase is likely to be welcomed by the pension industry after rates fell between December 2009 and March 2010 by 0.58 per cent.
Craig Fazzini Jones, Director & Head of Designs for Retirement, MGM Advantage said: “If annuity rates do rise, this will come as welcome relief to the annuity sector because rates in general have been falling.
"However, regardless of the political situation, we would urge those nearing retirement to shop around to make sure they are maximising their retirement income over the longer term, and are not influenced by short-term market movements.
“Choosing the right annuity for you is one of the most important financial decisions you will ever have to make, so it is important to get it right."
But the hung parliament has not delivered good news for the rest of the UK’s economy following a slump in the pound. Sterling has fallen against both eh euro and the dollar today amid concern from the markets that an unclear result will mean a delay in tackling the national debt.
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