Monthly Archives: January 2010

Get the best UK pension annuity rates in 2010

Retiring this year? Then get the best UK pension annuity rates in 2010. Many people assume that they have to buy a pension annuity from their existing pension company who runs their pension plan. However, this is not the case, as you have the right to shop around for the best annuity rates when you retire utilising the  open market option (OMO). Worryingly, recent figures from the Association of British Insurers (ABI) show that 61% of people buying an annuity in 2007 did not shop around as they should have.

There are significant differences between the level pension annuity rates offered by different annuity providers, basically underlining the fact that you should use the OMO. Discouragingly, a recent survey showed that 2/3rds of people buy their annuities from the same company with whom they built up their pension, and that many people are unaware that they have the right to shop around to find the best annuity rates. This OMO facility really can make a significant difference to the level of annuity income you receive and therefore your lifestyle in retirement.

You can shop around and obtain annuity quotations from all of the leading providers yourself, which will prove a time consuming exercise. Alternatively you can ask a pension annuity specialist to do this on your behalf. Please complete our enquiry form and we will obtain a free quotation for you based on the highest rates we can find for you. Buying an annuity is one of the most important decisions you will ever make as it determines the level of annuity income you will receive for the rest of your life, and you need to find the best UK annuity rates.

It is therefore crucial that you obtain the best level of income from your hard earned pension fund to ensure you enjoy the highest quality of life possible in retirement. Whether you have already decided which annuity you want or you require advice on the most appropriate one, or indeed if an alternative would be more beneficial, we can help you. So, choose the best option and shop around for the best pension annuity rates utilising the OMO and don’t just accept what your existing pension company offers.

Taking cash early; look out for pension annuity rates

If you’re looking to taking cash early; look out for pension annuity rates if you are on the younger side. Should you be taking your tax-free cash entitlement early, anyway? Let’s look at some of the issues to be considered. First, should you take your pension benefits at age 50 if you can? We’ve now got only a couple of months to go before the date when the minimum age at which people can take pension benefits rises from age 50 to age 55, and anyone in this age group wishing to take their tax-free cash entitlement and annuity must take specialist advice quickly.

However, before you dash out to get your tax-free cash you should consider whether it is actually a sensible thing to do to take your pension before you fully retire. If there is an optimum age to be taking pension benefits and a pension annuity it is probably between age 60 and 65 depending on individual circumstances, which means that anybody younger than this should think very carefully before taking their benefits early. Taking pension benefits early means taking payment of the tax-free cash (maximum 25% of the pension fund value) and setting up an annuity or an unsecured pension (previously known as income drawdown).

For most people the attraction of taking their pension benefits before they fully retire is to have use of the tax-free cash at an early stage and to boost their income. However, this means that the cash will probably  be spent and then not available when they fully retire and therefore their future income may be less. In other words, not such a big pension fund to buy annuity rates with. Most people can always put this tax-free cash to good use, paying off mortgages or debts, perhaps, but it is important to remember that this cash might have been relied upon for expenditure after retirement. And, taking an annuity early isn’t such a good idea, never mind the tax-free cash issue, as annuity rates are distinctly poor for younger lives.

Don’t just look at best pension annuity rates

Older workers; don’t just look at best pension annuity rates and don’t simply opt for default pension annuities. It really is important that UK retirees look beyond the default annuity rates and products that their pension providers may offer to them, an expert has recently highlighted. According to Sun Life Financial of Canada’s (SLFoC) Mark Stopard, there may be a number of alternatives available to the UK’s older workers when they come to sort out their retirement finances.

Mr Stopard, SLFoC’s Head of Marketing, commented that the drop in the average pension annuity rates achievable underlines the need for those approaching their retirement and their advisers to explore all the various options open to them, which includes unsecured pension (previously known as income drawdown). He went on to highlight the increasing availability of variable annuity products, the popularity of which seems to be on the increase. It was recently pointed out by Steve Charlton, Senior Consultant at Mercer, the leading pension and annuity consultants, that people may actually benefit from a different level of retirement income depending on how favourable pension annuity rates are around the time of their retirement.

Enhanced annuity rates provider calls for flexible retirement age

MGM Advantage, the specialist enhanced annuity rates provider, is calling for a more flexible retirement age. As the House of Lords meets during this week, MGM Advantage supports the call for the UK government to scrap the retirement age. Craig Fazzini-Jones, from MGM Advantage suggests that people want to work beyond the current retirement age for all sorts of reasons, some because they really have to financially, and some because they just don’t want to stop working. Either way, increased flexibility at retirement can only be a good thing and removing the retirement age completely is one way.

He added that there’s also a growing demand for a range of  more flexible retirement income solutions which can meet the varying and changing needs people have both leading into their retirement and during their retirement years. MGM Advantage’s research study, Retirement Nation, revealed quite staggering results regarding retirement plans. It revealed that around 23% of over 55’s have decided to work beyond the state retirement age of 65 with no real final retirement plan in mind; that about one-third of people over 55 have been forced to simply put off their retirement plans and continue working due to the effects of the current economic downturn; that about 35% of over 55s who are still at work, which is around 1.85 million people, are now resigned to working longer than they had anticipated in order to replenish their pension funds; that 32% of over 55’s haven’t prepared at all for retirement; and that around 35% of over 55’s admit to having done nothing in readiness for life after work. Many people just haven’t prepared themselves for the time when they have to buy an annuity, enhanced or not.

Even the best pension annuity rates aren’t enough

Even the best pension annuity rates aren’t enough if you haven’t got a pension fund large enough to make buying an annuity worthwhile. The average retired UK households, especially those between 65 and 74, should possibly consider debt management advisers to find the extra £429 each year to maintain the standard of living they enjoyed a year ago. At least, this was the recommendation put forward by MGM Advantage, the enhanced annuity specialist. According to them, a household where the principal occupant is aged 75 and over needs an extra 225 to cover the cost of living. They might be right with the figures, but I’m not so sure about the debt management comment.

MGM Advantage director Aston Goodey said that many retired people have had to suffer a rise in their cost of living.  This, coupled with the fact that many people are now living longer is placing considerable pressure on limited retirement income.  All the more reason to shop around for the best annuity rates, and seek financial advice to ensure you get the best possible deal at retirement. MGM said that the cost of living for the average household has risen by £670 or around 1.85% over the last year. These figures are based on how different households actually spend their annual budgets and changes witnessed to the cost of goods and services for the period October 2008 to November 2009.

Best annuity rates are impaired life annuity rates for lung cancer

The best annuity rates are impaired life annuity rates for lung cancer, and need to be investigated if you are unfortunate to be suffering from such a serious illness. If you have a personal pension plan you may be able to increase your pension annuity income when you decide to take your pension benefits because you have such a lung condition. Your retirement income is probably going to be provided through an annuity. People living with a lung condition may well benefit from much higher annuity rates from an impaired life annuity, giving you a better level of pension annuity income. Find out how we can help you to obtain a higher rate by accessing a free annuity quote.

The British Lung Foundation is keen to assist the many sufferers and is looking to provide a comprehensive enhanced and impaired life annuity rates service. So, when you make the decision to commence drawing an annuity income and you unfortunately have ill health it’s best to seek out the right type of pension annuity that will pay you the best annuity rates. Your choice of which type of annuity is crucial, because once the annuity has started to make payments to you, you cannot change your mind. 

It is very unlikely that you will have to stick with your existing plan pension provider when you want to buy a pension annuity, and often they will not offer you the best annuity rates or the best options. Plus, not all annuity providers offer the same benefits, and the difference between the highest and lowest incomes available from them can be significant. In fact annuity rates can actually vary within one particular provider as the rates can differ according to which options you choose. We believe our comprehensive service provides you with the means of finding one of the best pension annuity rates at retirement. The aim of this website is to maximise the income available to you, and for you to get the best value, from your existing pension fund(s).

Pension annuities and alternatives to getting the best pension annuity rates in 2010

This article is about pension annuities and alternatives to getting the best pension annuity rates in 2010; some alternative retirement options. Although a basic annuity will be suitable for most people, there are alternatives available for those with larger pension funds and a willingness to take higher risks. The main two options are an investment linked annuity and income drawdown (now unsecured pension). With normal annuities, your purchase money will be invested in gilts. These pay out a fixed level of interest and, because the UK government issues them, they are regarded as a particularly low risk investment.

Investment-linked annuities covers both with profits annuities and unit linked annuities, and, if security is important to you and you’re depending on your annuity as your sole source of income, you may find these products too big a risk to take. Compared to a conventional pension annuity, in theory you could potentially get better returns with an unsecured pension. But they’re called unsecured for a reason, and your investment could be susceptible to drops in the stockmarket. This option is really for sophisticated investors who are comfortable taking risks and who could possibly afford to lose some money. With an unsecured pension arrangement, your income is not set for life. It remains partly invested and exposed to the stockmarket.

There are three different types of unsecured pension. There are short-term annuities, income withdrawal, and phased retirement, and there are three key reasons people choose these over conventional annuities. There are those who only need a small amount of the income that would be accessible from a pension annuity and they may wish to leave most of the fund invested while drawing their limited income. And, when annuity rates are low you might decide to delay buying one in the hope that rates will increase. There are no guarantees that this will happen, though. Or, if you want to leave the fund to your partner should you die, an unsecured pension means your money is more accessible.

 

Gilt yields good for UK pension annuity rates, but..

Gilt yields good for UK pension annuity rates, but..and there is a but. The dangers posed to savers and investors by the falls in gilt values far outweigh the risk of rising ongoing inflation, according to Martin Bamford of IFA, Informed Choice. The recent surge in the Consumer Price Index (CPI) to 2.9% in December marked its highest spike since records began, heightening concerns that rising inflation will threaten the UK’s economic recovery and bring misery to hard pushed savers.

Speculation the next government we get could raise VAT to 20% and increase interest rates (good for annuity rates) in an effort to reduce the UK’s huge budget deficit is also concerning. However, such fears have been cast aside by Mr. Bamford, who thinks savers and investors actually have more pressing problems. He does not think inflation will be a huge issue as there is a great deal of spare capacity in the economy, and as we have one of the lowest rates of VAT in the EU even if VAT is increased to 20% that would only bring us in line with certain other countries.

The biggest danger to investors, he suggests, lies in the UK gilt markets. With such a huge level of gilt issuance combined with the financial strength credit rating of the UK it is possible we are creating the conditions for a perfect storm. Although the fall in the value of gilts will push up gilt yields, and therefore increase UK annuity rates, investors will lose out as the value of their investments drop. He also dismisses the potential threat posed by the use of technology following research by the Fair Investment Company suggesting investors are shunning financial advisers for the ease of access and research capabilities present within the internet.

UK annuity rates fell by 1.5% in the last half of 2009

Annuity rates might be on the up in 2010, but UK annuity rates fell by 1.5% in the last half of 2009, according to some fresh research from MGM Advantage. It revealed that rates for pension annuities fell over the past 6 months of 2009 by an average of around 1.5%. The fastest falling annuity rates are standard annuities, according to the latest index. On average annuities as a whole reduced by 1.64% in the last six months of 2009, but standard rates fell the most at 2.16%. The gap between the highest annuity quartile and the lowest annuity quartile also grew to 64%.

The data also shows that enhanced annuities are fast becoming more attractive to retirees as they now pay on average 22.7% more than standard, conventional annuities. Craig Fazzini-Jones of MGM acknowledged there was a lot of volatility around in the market at present, but that potential annuitants should always shop around using the open market option (OMO) to find the best deal. Whilst the average enhanced annuity rates might be 22.7% more than standard, it might well be the case that you could actually get a lot more than this.

Postcode annuities can lead to the best pension annuity rates

Postcode annuities can lead to the best pension annuity rates, or not, depending on where you live. Annuity rates are now being calculated differently by some major UK insurance companies (the annuity providers) in that they now take postcodes into account. Where you live can actually have a big impact on how long you will live in retirement. Average male life expectancy in central Glasgow is 70.7 years, whereas in London’s wealthy areas of Kensington and Chelsea it is 84.3 years, according to recent data, and that’s quite a difference.

Therefore, someone living in what constitutes a “more affluent” postcode area is statistically likely to live longer than someone living in what might be termed a “less affluent” postcode area. Therefore, the annuity provider will probably have to pay out the pension annuity income for longer to someone living in the “more affluent” area. All this means that the pension annuity income will be lower for someone living in a “more affluent” area, because it’s being paid out for longer. Conversely, someone living in a “less affluent” area is not expected to live so long, so any pension annuity payments will probably be paid for a shorter period, and therefore the income will be higher. Some companies reckon there could be a 5%-7% difference with postcode annuities, and possibly up to 10%, in the pension annuity rates an individual will be actually offered, depending on where they live.

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