Annuity rates are still dropping. Indeed, some industry experts are suggesting that annuity rates are in freefall, they’ve dropped that much. Annuity rates have actually fallen around 9.3% over the past three years, meaning significantly less money for people about to retire and draw their pensions, according to the most recent results of MGM Advantage’s Annuity Index report. Since September last year, annuity rates for conventional annuities rates have fallen by a hefty 4.7%. Meanwhile, enhanced annuity rates that are offered to those individuals with certain medical or lifestyle conditions have fallen by a slightly lower 2.45% – I suppose that’s good news if you’re eligible.
The majority of individuals about to retire still buy an annuity to provide them with their important retirement income, so the latest news about annuity rates comes as another blow to these older people who are already having to suffer from stockmarket falls around the world and high inflation. Aston Goodey, of MGM Advantage, states that these findings are shocking and that this will put even more financial pressure on those people in their retirement or approaching their retirement. He adds that since MGM Advantage launched their impressive Annuity Index in June 2009, the index has fallen eight out of the nine occasions it has been updated. With the continued economic uncertainty we are witnessing and suffering from, the long-term outlook for both conventional annuity rates and also enhanced annuity rates is proving difficult to predict.
Most industry experts are hard pressed to see annuity rates rising in the short term because of the various economic pressures being brought to bear, as well as the forthcoming impact of European financial regulations, Solvency 11, and single sex pricing. Indeed, that is why it is wise to consider other retirement solutions which offer you greater flexibility and don’t tie you into a low annuity rate for life.
The MGM Advantage Annuity Index also illustrates that the difference between enhanced annuity rates and conventional annuity rates available on the open market has become more prominent recently, with the best enhanced annuity offering an annuity rate that is around 21% better than the worst conventional annuity rate. The message is clear if you’re about to retire and you’re going to buy an annuity. Use your open market option and shop around for the best deal you can, as it can make quite a difference to your retirement income.
