A lifetime annuity, on best pension annuity rates, maybe enhanced, causes regrets for some retirees, because those best pension annuity rates are fixed for life, Living Time warns. They are suggesting that calls for individuals nearing retirement to buy lifetime pension annuities quickly before annuity rates fall may nudge retirees into a decision they might regret for the rest of their lives. Dave Harris, their managing director of sales and marketing, said stockmarkets around the world have bounced back in recent months and annuity providers have recently reduced annuity rates but there are some equally forceful reasons why whilst it may be appropriate to reduce the investment risk in ones pension portfolio it may be a poor time to lock in to lifetime annuity rates.
He added to this, suggesting that quantitative easing (QE) is probably depressing interest rates, but what happens when the programme of QE ends? The Bank of England is supposedly using this measure to stave off deflation and if it succeeds it will have to then switch back to controlling inflation to help those people living on fixed incomes. If, and, indeed, some would say when, interest rates do start rising again, this should push up gilt yields and allow pension annuity rates to improve. Nobody really knows where annuity rates or inflation are heading over the next two or three decades, the kind of timescale retirees must try to consider.
He then said that Living Time don’t think the uncertainty of this year is a good time to bet a whole pension fund on a lifetime pension annuity purchase, and people should be looking to optimally phase their purchase over perhaps several years, taking advantage of the fact that lifetime annuities may appear far better value with older age and especially if ones health deteriorates. And, while the macroeconomic environment the world is in creates positive and negative forces impacting pension annuity rates, often something different should be considered regarding the income levels an individual customer is entitled to in their retirement.
