Yearly Archives: 2009

Help needed to improve UK pension annuity rates and quotes

Help needed to improve UK pension annuity rates and quotes. The National Association of Pension Funds (NAPF) has called on the government to skew the issuing of gilts towards long-dated gilts and index-linked gilts. NAPF’s pre-budget report submission said such a move by the UK government would reduce pension fund deficits and cut the scale of overall pension fund liabilities on employer balance sheets. It said members of defined contribution pension schemes would also benefit, especially those nearing retirement because of higher UK annuity rates.

The NAPF said that, given low yields at the long-end of the gilt yield curve, skewing the issuance towards longer term maturities would also help give the government access to a cheaper source of finance, and potentially help accelerate the current economic recovery. It said that there was a “strong, and on-going demand” from pension schemes and insurance companies (annuity providers) for long-dated gilts and index-linked gilts so they can better match their liabilities. Recently, the NAPF’s annual survey revealed 82% of employer pension funds believed this action would be the most effective way government could help them continue to provide the better defined benefit pensions for their employees. However, despite the NAPF’s call for more gilt issuance and its belief that scheme demand is high, the Bank of England has said there wasn’t much scheme participation currently in index-linked gilt auctions. So, we might just have to suffer longer with lower pension annuity quotes and rates.

Better UK annuity rates, bigger pension fund; buy your pension annuity early

Better UK annuity rates, bigger pension fund; buy your pension annuity early before pension annuity rates fall back or we see another blow to the stockmarkets around the world. The big rises in the stockmarket this year are allowing people to consider retiring earlier than they had previously feared, new research from Mercer, the consultancy, shows. Employees with workplace pension arrangements now have to work six months less to retire on the same level of income, this research shows. Apparently, the outlook for people nearing their retirement is looking better now than it has during the past nine months, suggests Steve Charlton, from Mercer.

Sharp stockmarket falls seen earlier this year caused many people to delay taking their retirement or continuing to work part-time in order to recoup the massive losses in their pension funds. In March, when the FTSE 100 was at its lowest point since the current financial crisis began, a person who had planned to retire at the age of 65 would have needed to work until 67 to receive the same level of income, according to Mercer’s research. By the end of October, a combination of higher pension fund values and better UK annuity rates allowed the same person to retire at age 64 with the same annuity income.

In total, the UK’s defined-contribution (DC) pension scheme funds have risen by more than 25% in the past year, according to research from Aon Consulting. But consultants also warned that the stockmarket falls seen had exposed how little awareness employees actually have of the risks inherent in a DC pension arrangement. DC schemes have gradually been replacing final-salary pension schemes in recent years. And that means that these employees now have to rely on pension annuity rates for their retirement incomes.

Hopefully UK pension annuity rates in 2010 will improve

Hopefully UK pension annuity rates in 2010 will improve, as the changes over the past ten years have been pretty deplorable. Pension annuity incomes have really fallen back over this past decade. All this according to a recent KPMG report. In that period, the average pension scheme only managed to grow its fund value by just over 2.25% per year. And, pension fund purchasing power fell from a £100,000 fund being able to buy an annuity income of about £9,000 per annum at the beginning of 2000 to less than £7,000 per annum today. That is a pretty significant change, I’m sure you’ll agree.

Meanwhile, life expectancies (longevity) have risen dramatically, leaving companies and individual retirees  needing to fund a longer time in retirement. At the beginning of 2000, most insurance companies (the annuity providers) assumed that a 65 year old male pensioner would live for the next 16 years. Now they are expecting a 65 year old male pensioner to live for 22 years. That’s an extra 6 years life expectancy in only ten years. This again has an impact on UK annuity rates.

Market conditions have also exacerbated the situation somewhat. A pension scheme following a fairly normal investment strategy over the period January 1, 2000 to December 1 this year, would have seen its investments grow at only 2.25 per cent a year. Ian Warman, partner at KPMG in Leeds, said that the decade from 2000 to now tells an unfortunate story in respect of equity markets spanning from the lofty heights of the dotcom boom to the current credit crisis we are witnessing. And, a lower value pension fund means a lower retirement income, irrespective of annuity rates.

Mr Warman added that they expect to see more companies closing pension schemes before selling them to third parties. And individual savers may well turn away from saving for pensions, and this could be a very risky strategy as these people are likely to have a difficult job running down their capital at the correct pace to potentially see them through to the ripe old age of 100 and perhaps beyond.

IFA’s lose interest in finding best UK pension annuity rates for 2010

IFA’s lose interest in finding best UK pension annuity rates for 2010. Independent financial advisers (IFAs) are losing interest in offering retirement savings products as more flexible options become increasingly important, according to research from Defaqto. Its research suggests the number of IFA’s who see pre-retirement savings products as their major focus has dropped this year. Defaqto says clients are increasingly looking at more flexible savings products and investment vehicles, such as SIPPs and ISAs, while traditional personal pension plans see their popularity wane.

A survey of 500 IFAs found just around one-third felt pre-retirement savings were the products they advise clients on the most, down from around half in 2008. A far greater number were giving nearer equal weight to post-retirement income solutions, up just under half from one-third, while less than one-fifth were now biased towards these product areas. Defaqto says current poor economic conditions and changing demographics have helped cause the decline in popularity for retirement savings vehicles. The increasing attractiveness of ISAs has also provided great competition to the traditional personal pension plan, it adds. So that means less people looking for best annuity rates in 2010, does it. I doubt it.

Enhanced annuity rates and impaired life annuity rates are among the most important solutions, according to over three-quarters of IFAs surveyed. Again, income drawdown follows close behind that, seen as important by seven in ten of advisers. Advisers have identified the opportunities available to them to add value and earn fees, Defaqto says, but it believes many advisers are struggling to reform their processes to offer a whole of market service in this market.

Best UK pension annuity rates alerts earlier

Best UK pension annuity rates alerts earlier. There are to be earlier wake-up retirement calls, suggests the Association of British Insurers (ABI). They are encouraging insurance companies (annuity providers) to contact customers close to retirement a little earlier than the current four to six months under new updated guidance on wake-up packs. These updated wake-up packs provide more information for consumers with defined contribution personal pension type policies, aimed at helping them decide how to take their important retirement benefits, highlighting the right to shop around for better annuity rates using the open market option (OMO), and the different types of annuities actually available.

Margaret Craig, acting director general of the Association of British Insurers, said recently that they have listened to the important views of consumers, the pension industry and other relevant experts to identify how best to deliver key information and encourage consumers to read these packs. This new guidance will hopefully ensure consumers get clear, valuable and easy to understand information at the point when they are making hugely important financial decisions about how to turn their hard earned pension fund into a (decent) income in retirement with better UK annuity rates

Smoker annuity rates could be the best annuity rates for you

Smoker annuity rates could be the best annuity rates for you. How? Well, quite simply, the easy answer is you must be a smoker to get a smoker annuity rates. When you decide to buy your retirement income you take your pension fund (probably after taking your tax free cash) and approach an insurance company (annuity provider) to purchase your pension annuity. Be careful, though, you do not need to buy your  annuity from the same provider who has managed your pension savings and you can elect to go to the open market instead to find the best annuity rates available and transfer your pension to a new provider, known as taking your open market option (OMO).

However, if you are a regular smoker you can apply for smoker annuity rates. The criteria for this is that you smoke broadly 10 cigarettes a day and you have regularly smoked for at least 10 years. Please check the annuity providers definition as the criteria can vary a little. You may think its not worth moving your pension pot around but on average you might actually gain around 20% against non-smoker annuity rates. In the first instance you should approach your existing pension provider and ask if they provide such rates for smokers. Using the services of a specialist adviser is a good idea as smokers annuities are a bit more complex than standard annuities. You will need to go through a medical questionnaire and the provider may contact your G.P. to check your smokers status.

Enhanced annuity rates provider to offer annuity rates to partners

Enhanced annuity rates provider to offer annuity rates to partners. Just Retirement says it is close to agreeing certain new deals to provide enhanced annuities to the customers of up to nine firms, including insurance companies and closed life offices. Just Retirement, which was bought recently by private-equity firm Permira for just about £230m in September, has developed a streamlined processing service for advisers who want to refer on customers with smaller pension funds and is likely to use this service in future arrangements.

Head of annuities at Just Retirement, Peter Ellis, says that they have been looking at ways to take cost out of the annuity writing process for independent financial advisers (IFAs) and have come up with a number of initiatives designed specifically to give them a more simple method of doing annuity business, particularly focusing on smaller funds, which still need to find decent annuity rates. They are also working with a number of firms to deliver a similar type of proposition to groups of customers who are most likely disenfranchised and have never had an IFA. Some will be with what are called closed life funds while some will be with open life offices that do not want to get involved with annuities. They are also talking to affinity groups, which have access to their sort of audience but are not involved in financial services. They hope to be announcing these new relationships in January and February of next year. 

Best annuity rates, the right pension annuity and the right annuity options important.

Best annuity rates are what matters at retirement. Every little extra helps. Selecting the right annuity and the right options is important. Take your time to find the best deal. With the right annuity rates you could have a richer retirement. Is that important to you? Some would say it’s the most important financial decision you’ll ever make. How nice it would be to be a bit better off in retirement. Enhanced annuity rates are available if you have ill health or smoke. So make sure you disclose any ailments you might have.

Forget your current pension provider, shop around. Open market option makes sense. Rates could be higher elsewhere. And you know that’s the idea. Various pension annuity rates and annuity options are available. Each one warrants consideration. Rightly so. You owe it to yourself to put in the effort. Most people don’t shop around. Everybody should. Rates can vary tremendously. Rates can be different by 20% between the best and worst. You need to find the right ones.

Conventional annuities might be the answer. Higher rates come from other annuities. Really important that you pinpoint which is right for you. Impaired life annuity rates might be the answer. Smoker annuity rates might be for you. Take a look at what is available. Maybe you’ll get a surprise. Always consider your wife, if married. Surprise her by giving her some financial protection if you should die early.

UK pension annuity rates to rise; The Pensions Advisory Service suggests

UK pension annuity rates to rise; The Pensions Advisory Service is suggesting. Annuity rates are expected to increase after the recent pre-Budget report sent the price of gilts falling. Recent retirees and those about to retire are currently facing some of the lowest annuity rates in history. However as the Bank of England moves towards a position of selling bonds as it unwinds its quantitative easing (QE) programme there is hope that this position might change. Anything to help annuity rates rise would be welcome.

Under QE, the Bank of England has been aggressively buying various bonds, pushing up the prices of gilts. This had had a knock-on effect on UK annuity rates. Last week the Bank announced it would soon be selling corporate bonds, as well as actually buying them. A fall in the price of gilts serves to increase the yield of the gilts, which in turn determine pension annuity rates. Hargreaves Lansdown’s analyst Nigel Callaghan says that the price of gilts has pretty much fallen through the floor. The annuities market is spooked by the amount of Government debt and the fact there is no credible plan in place to begin bringing the budget under control. Annuity rates in the short-term should go up if this carries on but it could be a temporary blip. 

Spend more time looking for the best pension annuity rates than shopping

You really should spend more time looking for the best pension annuity rates than shopping, but apparently this is not the case. More time is spent Christmas shopping than annuity shopping, according to Aviva. Its research suggests that us Brits spend up to 26 times longer shopping for Christmas presents than we do looking for the best annuity rates for our retirement income. On average, UK adults devote three days, six hours and 35 minutes a year shopping for Christmas presents for their loved ones, cats, dogs, and even their bin collectors. Added up this amounts to six months over the course of a lifetime.

In comparison, research showed that in the UK we spend just seven days in total shopping around for the right annuity or retirement product. Women in particular spend longer shopping (surprise, surprise) for Christmas presents for their nearest and dearest. More than 36% would spend more than one week every  year, equivalent to more than one year and three months over the course of a lifetime, compared to around 55% who spend just one week or a little more selecting a lifetime financial product. It’s a bit ridiculous, really considering the importance of securing the best annuity rates.

Darren Dicks, head of pension annuities for Aviva, said that whilst it’s great to see that people are becoming more savvy as consumers and are endeavouring to shop around to get the best, it’s worrying that we might spend more time choosing Christmas gifts for our dog than we would finding the best financial product to see us through the whole of our retirement. He added that it’s important that retirees get the best advice and find the right solutions and the right annuity rates to help them increase their income in retirement. 

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