Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

UK Annuity Rates Down 2.7% in 2010 Despite Late Rally

/ Pensions & Retirement Jan 12, 2011 - 04:41 AM GMT

By: MoneyFacts

Best Financial Markets Analysis ArticleThe record number of individuals turning 65 this year are likely to face a major challenge when they come to secure their retirement income after research from Investment Life & Pensions Moneyfacts revealed that annuity rates fell for the third consecutive year in 2010.


Another frustrating year
The average rate for both males and females aged 65 purchasing a standard level without guarantee annuity (based on a £10K purchase price) decreased by 2.7% in 2010 (see Table 1). This may be a disappointing drop, but it is less severe than the cuts posted in 2009 when annuity rates endured a more painful reduction of 8.7%. Enhanced annuity rates experienced lower falls than their conventional counterparts, with the average male rate down by 2.1% and the average female rate down just 1.4%.

Table 1: A pension annuity rates over the last twelve months

 

Average
standard annuity rate
Male age 65

Average
standard annuity rate
Female age 65

1 January 2010

£624

£584

1 January 2011

£607

£568

1 year change

-2.7%

- 2.7%

Figures show gross annual annuity payable monthly in advance. Figures based on an annuitant aged 65 buying a standard ‘level without guarantee' annuity for a purchase price of £10K.
Source: Investment Life & Pension Moneyfacts 1.1.2011

Late mini rally
Last year’s drop would have been far greater had it not been for a late mini rally in rates. Having taken a big hit during the summer and early autumn months, annuity rates staged a welcome mini rally during the last two months of 2010, increasing on the back of rising bond yields. At the £10K purchase price point, the average male annuity rate increased by 1.5% and the female rate by 1.6% between November 2010 and January 2011. For the higher purchase price of £50K, this upsurge has been even greater, with the average male rate up by 1.7% and the average female rate now 2% higher. These latest increases mean that annuity rates have now returned to August 2010 levels.

Market leading rates
The market leading rates available through the course of last year seem to have been more adversely affected than the average rates (see Table 2). Back in January 2010 the top standard level without guarantee annuity rate for a male aged 65 (based on £10K) was £678. Now the market leading rate is just £647, a reduction of 4.8%. The equivalent market leading rate for a female has dropped by 4.1%.

Table 2: Market leading pension annuity rates over the last twelve months

 

Best annuity rate
Male age 65

Best annuity rate
Female age 65

1 January 2010

£678

£634

1 January 2011

£647

£608

1 year change

-4.5%

- 4.1%

Figures show gross annual annuity payable monthly in advance. Figures based on an annuitant aged 65 buying a standard ‘level without guarantee' annuity for a purchase price of £10K.
Source: Investment Life & Pension Moneyfacts 1.1.2011

An historical perspective
Whilst the latest fall in annuity rates may not seem that damaging by itself, the longer term picture reveals the extent to which today’s retirees are struggling to achieve the same level of retirement income afforded to their predecessors (see Table 3).

Over the past 16 years, a combination of falling gilt yields and improving mortality rates has seen rates drop by a massive 46% for males and 43% for females.

Table 3: 16 years of falling pension annuity rates

 

Average
annuity rate
Male age 65

Average
annuity rate
Female age 65

1 January 1995

£1,138

£1,010

1 January 2011

£607

£568

16 year change

-46.6%

-43.7%

Figures show gross annual annuity payable monthly in advance. Figures based on an annuitant aged 65 buying a standard ‘level without guarantee' annuity for a purchase price of £10K.
Source: Investment Life & Pension Moneyfacts 1.1.2011

 

Where next?
For those baby boomers about to hit retirement the big question is what does the future hold for annuity rates, and can the recent revival in annuity rates continue during 2011?

“The recent annuity rate rally is unlikely to last much longer, and could ultimately prove nothing more than temporary respite from their downward trajectory,” said Richard Eagling, Editor of Investment Life & Pensions Moneyfacts. “One of the key influencers of annuity rates are the yields on gilts and corporate bonds, and unless these continue their recent upsurge for a sustained period, annuity rates are likely to remain in the doldrums.”

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules