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Pension News Annuity Rates Are The Worst Ever According To Experts 18470956


Annuity rates are the worst ever according to experts

Annuity rates are the worst ever according to experts

15 June 2010 / by Lois Avery

Pension savers approaching retirement are facing the lowest annuity rates for 20 years meaning their income will be sharply reduced.

A pension pot of £100,000 will now pay out £6,350 annually whereas in the 1990s it would have generated an annual pay out of closer to £15,000. Add to that the low Bank of England base rate and savers are getting an even worse deal for their pensions.

However, Saga has said that buying an escalating annuity could protect your lifestyle in retirement against rising costs.

Research from the Saga Annuity Service reveals that a person who took an escalating annuity out in 1995 would now receive on average £6141 more a year compared to someone who had opted for a fixed version.

With current standard and enhanced annuity rates as low as half the rate they were a decade ago this type of annuity could help provide extra income. But despite this Saga’s research shows that only 5 per cent of those buying an annuity take one which provides an increased income over time to account for inflation.

Andrew Goodsell, Executive Chairman, Saga Group, comments: “Maintaining the buying power of pension income in retirement is incredibly important in helping people enjoy their lives. Escalating annuities offer peace of mind by providing a buffer against increasing inflation and retail prices, allowing people to lead more comfortable lifestyles in retirement.”

Pension reform is high on the Government’s agenda as the emergency budget approaches and figures this week have revealed that public sector pension could cost every household £4,000 a year.

A report from the Office for Budget Responsibility showed that In 2010-11, the amount spent by the taxpayer on public sector pensions will be £4 billion, rising to £5.5 billion the following year.

The cost will then rise by 20 per cent each equating to almost £4,000 for each every home.

The news has put pensions at the forefront of the coalition’s attention and measures for reform are expected to be announced next week in the emergency budget.

Click here to compare annuity rates »

© Fair Investment Company Ltd



Provider Annual Income Payment Terms Purchase Amount Get Quotes
£6,950
Monthly income for life
£100,000
More Info >
£6,521
Monthly income for life
£100,000
More Info >
£6,502
Monthly income for life
£100,000
More Info >
£6,372
Monthly income for life
£100,000
More Info >
£6,154
Monthly income for life
£100,000
More Info >
Quotes based on man aged 65, £100,000.00 purchase amount, conventional, level escalation, nil guaranteed period, paid monthly in arrears without proportion. Annuity rates correct as at 22/06/2011.
Provider Annual Income Payment Terms Purchase Amount Get Quotes
£7,888
Monthly income for life
£100,000
More Info >
£6,988
Monthly income for life
£100,000
More Info >
£6,502
Monthly income for life
£100,000
More Info >
£6,950
Monthly income for life
£100,000
More Info >
Quotes based on male smoker (20 cigarettes per day) aged 65, £100,000.00 purchase amount, conventional, level escalation, nil guaranteed period, paid in arrears without proportion. Annuity rates correct as at 23/11/2011.
Provider Annual Income Payment Terms Purchase Amount Get Quotes
£6,556
Monthly income for life
£100,000
More Info >
£6,421
Monthly income for life
£100,000
More Info >
£6,194
Monthly income for life
£100,000
More Info >
£5,928
Monthly income for life
£100,000
More Info >
£5,738
Monthly income for life
£100,000
More Info >
Quotes based on a woman aged 65, £100,000.00 purchase amount, conventional, level escalation, nil guaranteed period, paid in arrears without proportion. Annuity rates correct as at 23/06/2011.
Provider Annual Income Payment Terms Purchase Amount Get Quotes
£7506
Monthly income for life
£100,000
More Info >
£6,758
Monthly income for life
£100,000
More Info >
£5,928
Monthly income for life
£100,000
More Info >
£6,556
Monthly income for life
£100,000
More Info >
Quotes based on a woman smoker (20 cigarettes per day) aged 65, £100,000.00 purchase amount, conventional, level escalation, nil guaranteed period, paid in arrears without proportion. Annuity rates correct as at 23/06/2011.
Provider Annual Income Payment Terms Purchase Amount Get Quotes
5,138
Annual income for life
£100,000
More Info >
£5,294
Annual income for life
£100,000
More Info >
£5,048
Annual income for life
£100,000
More Info >
£5,389
Annual income for life
£100,000
More Info >
£5,535
Monthly income for life
£100,000
More Info >
£4,824
Annual income for life
£100,000
More Info >
Quotes based on man and a woman aged 65, £100,000.00 purchase amount, conventional, level escalation, nil guaranteed period, paid in arrears without proportion, spouse/partner annuity of 66% payable on first death without overlap. Annuity rates correct as at 23/06/2011.

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