Buying a retirement income is at its most expensive in 25 years - but Reeves can help
As they reach retirement age, many people use the money built up in their defined-contribution pots to buy an annuity. According to data released by the Financial Conduct Authority data last month, 70,000 annuities are still being bought each year. This is despite their popularity have fallen due to pension freedom reforms. Annuity rates - which reflect the guaranteed annual income for life that can be bought with a lump-sum - have plunged to a modern-day low, said Moneyfacts - the financial information group - in September.
Insurers back their annuity promises by buying UK government bonds or gilts. Their price has rocketed in recent months as investors regard them as a safe haven. Yields, which move inversely, have plunged. The yield on a benchmark ten-year gilt slumped to 0.367 per cent at the height of the parliamentary upheaval last week. Since no-deal was ruled out, it has rallied to 0.645 per cent.
''Moneyfacts said that the present annuity rate is at its lowest since its records began in 1994 – just 4.1 per cent - but Reeves Independent can help you make sense of it all.''
A person aged 65 can now expect to receive an income for life of £410 a year for every £10,000 handed to an annuity provider, depending on annuity shape chosen. That compares with a £468 income achievable on January 1. Just before the financial crisis of 2008, the typical annuity income from £10,000 was about £600 to £700 and in the 1990s it was £900 to £1,100.
While it's looking like a tough situation, it's important to take stock of it all. That's where Reeves Independent can help. We are experts in financial & retirement planning, with a superb investment team who are continually reviewing market conditions. We determine your attitude to risk and present you with all the options available to you, before investing in regulated products which we believe will get you the best returns. We will thoroughly discuss the best course of action for you, answer any questions you might have and help to alleviate any concerns you may hold. So, while annuity rates may have gradually slumped to a new low, we will discuss this and other choices that can help you meet your objectives,
Moneyfacts said that the present annuity rate is at its lowest since its records began in 1994 – just 4.1 per cent. The previous low point of 4.15 per cent was recorded in September 2016, when gilt yields plunged after the Brexit referendum result.
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These articles are for information only and are based on specific client circumstances which may be different to yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.