Market factors which effect the cost of gilts continue to bring havoc. With the latest round of uncertainty we are seeing in the eurozone created by the next Greek election, it is increasingly becoming a situation of when Greece will depart the euro, rather than if. The timing and manner of Greece’s departure will put greater pressure on UK gilt yields as international investors flock to find safer alternative investments, lowering yields.

Then there’s the European Court of Justice (ECJ) gender discrimination ruling that comes in later this year meaning that annuity rates have to be the same for males and females, but only if the annuity is purchased from a contract-based pension plan, including group personal pension arrangements. Annuities bought by occupational pension schemes can still use gender as a factor when working out rates. Currently, females are offered lower rates than males because, on average, females live longer. It might, therefore, be advisable for males to buy their annuities now rather than later when rates might fall.

You might think that females should think about delaying purchasing annuities until later this year. However, as over 80% of all annuities are bought by males, it is highly unlikely that females will benefit from a sharp increase in rates after December. And any small increase in rates could be easily be wiped out by other movements in rates caused by other factors.

Another issue to consider is Solvency II, due to be introduced in January 2014. Currently, how it might effect UK pensions is unknown, as we wait for final details and rulings. At the heart of Solvency II is the basic principle of making sure insurance companies hold sufficient capital. Although the impact doesn’t look as significant as perhaps originally predicted, it is still highly likely that annuities rates will noticeably drop, but by how much?

With an increasingly sophisticated and complex at-retirement market, there are various product solutions that could help retirees hedge their bets on rates. Income drawdown allows retirees to delay buying an annuity until a more appropriate time, but it has also seen income restrictions caused by low gilt yields and lower rates in GAD tables, now 100%. Others may want to look at investment-linked annuities, which, whilst still benefiting from any positive stockmarket moves, also allow a higher 120% income withdrawal.

Fixed term annuities are also an alternative to lifetime annuities. Although they may give retirees who become ill some wriggle room to purchase an enhanced annuity later on, they might not prove that useful in actually avoiding low annuity rates. Few would suggest that rates will be higher in 5 years’ time. And a guaranteed capital return at the end of the initial contract period, incorporating low investment returns, coupled with lower rates might simply mean that the retiree, at best, can continue to purchase the same level of income as they originally got, rather than seeing that income rise.

Instead of playing guessing games with timing, the conclusion might simply be for retirees to purchase an annuity when they require the income. The focus should really turn to product solutions, and more people shouldn’t simply be settling for a lifetime annuity. Instead, their medical and lifestyle issues might mean they are eligible for an enhanced annuity instead. In addition, more and more retirement products allow retirees to build in flexibility to suit their changing requirements.

The retirement product selection is becoming as important – if not even more important – than the timing. We can help you with your product selection. Enquire online or call us free on 0800 0124 374 to find out more.

Male single life level income annuity rates remain stable across the board. Aviva, in top place, held their rates at £5540, then Canada Life at £5393, followed by Hodge Life at £5341, then L&G at £5338 and then Prudential at £4848. All these figures are based on a 60-year-old man with a level income for a £100,000 pension fund. Also, no changes were made to providers’ inflation-linked annuities. Standard Life stayed top of the providers at £3022.80, followed by Aviva, Canada Life, L&G, and Prudential. This set of figures is based on a man, aged 60, with a retail prices (RPI) index-linked annuity with a £100,000 purchase price.

Although Aviva dropped their rates for smokers, Mutual Life kept its rate at £6721, as did LV= at a slightly lower £6377, followed by Canada Life at £6099 and then L&G at £5841. Figures are based on a 60-year-old male regular smoker with a £100,000 pension fund.

Ms Goodman said that the record low interest rates we are currently witnessing and the potential for further government quantitative easing (QE) were the two main drivers forcing down gilt yields and therefore annuity rates. She said that the recent announcement stating that interest rates will be kept at 0.5% will do nothing to help improve the situation for retirees. Dean Mirfin, of Key Retirement Solutions, stated that when rates do begin to fall or rise, it is crucial for independent financial advisers (IFAs) to tell their clients to get their applications in promptly.

Mr. Murfin said that a number of clients just sit on the paperwork and don’t really understand the urgency. Paperwork gets sent to clients with clear instructions and they imagine that they’ve got time, but if they sit on the paperwork for a couple of weeks that could be long enough for annuity rates to move and rates on quotes are only held for a certain number of days. Any rate drop can be quite detrimental to clients, and, conversely, if rates start to go up it is equally important to get the paperwork in because we don’t often see major upward trends with rates.

If you’re looking for the best annuity rates enquire online or call us free on 0800 0124 374.

He stated that he received an automated email response from Pru thanking him for his request but stating that it (Pru) was currently experiencing a high volume of requests for annuity quotes. His colleague rang Pru and was advised that it would take as much as 24 working days to get the quotation. He went on to say that under the new definition of independence – through the RDR changes – the FSA requires companies who will continue to give independent advice to clients to consider the whole of the market place, and this is what his company is doing. However it is disappointing that they will have to wait nearly 5 weeks before they can assess all the annuity provider’s quotes because of Pru’s unacceptable and unrealistic delays in providing their quote. He said that 50% of the providers that were sent emails responded in less than 24 hours.

A Pru spokesman admitted that a turnaround time of 24 hours for enhanced annuity quotes was, in some cases, not actually being met. In a statement he said that recent requests for quotes are up by about 40%, compared to just six months ago, and that they are making some steady progress to address this issue by seconding and recruiting additional members to the team, in addition to staff working overtime and at weekends.

However, the spokesman went on to say, due to a recent, significant increase in the volume of requests for quotes, and the detailed nature of the work carried out, in some cases this turnaround is simply not being met, and the Pru are sorry for any inconvenience this is causing. The Pru have committed to significantly improving this part of their service and various plans are in place to make this happen.

Mr Davies added that Pru’s 24-working day wait might have a direct impact on their client if we wait for their quote, and, putting it simply, the client would lose a month’s pension payment. Pru is in effect ruling itself out of contention for this enhanced annuity as the client wants to purchase his annuity promptly, and, with such delays how long would it take Pru to process an annuity application if the annuity were placed with them, he wonders.‎

Recent analysis carried by the Pensions Policy Institute (PPI) showed that shopping around using the open market option and buying an enhanced annuity could increase income in retirement for retirees with health or lifestyle issues by an average of 19%. If you’re looking for enhanced annuity quotes, we can help you; call us free today on 0800 0124 374 or enquire online.

The cost of plugging these increasing pension deficits threatens to eat up around 13% of companies’ total cash balances of about £750bn, diverting money away from vital required investment in both jobs and growth, PC warned. The additional funding is required despite £80bn of deficit reduction contributions made by businesses in the past 3 years. The BoE’s QE programme has actually been blamed for causing the shortfall, because of the aforementioned effect on gilt yields and annuity rates. It probably doesn’t help that people are living longer these days, and that has to be factored in.

The UK’s safe haven status has contributed to the problem because stronger demand for these gilts has also pushed down gilt yields. Indeed, UK plc has been trying to swim hard upstream, with lots of effort being put in, but without any real progress against the powerful deficits that exist, stated PC, risk management specialists. PC also stated that soaring deficits could force even more final salary pension arrangements to close in the future.

Only around 16% of UK final salary pension arrangements in the private sector are still open to new members, says the Pension Protection Fund (PPF), whilst 24% have actually been closed to future accrual for current members. The decline in overall pension provision has accelerated quickly since 2006, when 43% of these pension schemes were open to new members and only 12% were closed to future accrual. Not surprisingly, most open final salary pension arrangements are in the public sector.

Despite the £80bn of contributions to shore up deficits, those deficits have widened since 2009 – putting some pension arrangements about £110bn behind their targets, PC warned. Unfortunately, these final salary pension arrangements are now just too expensive to run.

If you require some assistance sorting out your retirement planning, we can help you. Enquire online or call us free today on 0800 0124 374 to find out more.

Oscar James, of Annuity City, argues that it is important that those who are considering annuities in their retirement shop around for the best deal. He stated that there are various factors pushing down rates including the effects of QE, low interest rates plus increasing longevity, and, on top of that there is the forthcoming ban on gender pricing, and the impact of EU Solvency II financial legislation – all this means that rates have suffered but pensioners can help themselves get a higher annuity income by shopping around and comparing providers. Not all providers offer the same rates or products, so shopping around at retirement is crucial if you’re to maximise your retirement income. If you qualify for an enhanced annuity due to medical or lifestyle conditions you could increase your income by as much as 40%.

Using this website you can find useful information about the various annuities on the market in addition to being able to catch up on the latest industry news. There is also useful information relating to alternative retirement products such as income drawdown. Purchasing an annuity is a once in a lifetime decision so making the right choices first time round is vital. Even if you don’t qualify for higher paying enhanced annuities, you could still obtain benefit from shopping around.

Instead of getting the lowest rates, let us help you get the best rates. Call us free on 0800 0124 374 today or enquire online to find out more. You could put signficantly more money in your pocket each month as a result. And that means you’ve got more money each month to pay your ever increasing bills with, or treat yourself to that holiday you’ve wanted, or, indeed, buy that new car you’ve promised yourself.

However, annuity rates have had further pressure put on them by the renewed uncertainty we are seeing stalking Europe’s single currency, owing to the link between gilt prices and annuity prices. Some providers began cutting their rates on Friday and yesterday, with others expected to follow. Billy Burrows of BRG stated that falls in gilt yield usually take a few days to start to effect rates. 

Fears of a Greek exit from the euro yesterday sent many international investors to look for safety, which included a leap in demand for gilts, which is UK government debt. A rise in the price for these gilts pushed down the yield on UK debt, owing to their inverse relationship, moving borrowing costs on 10-year gilts lower to 1.87% – the lowest level recorded since records began way back in 1703. As markets stabilised somewhat today, with improved news on the German economy, the gilt yield rose slightly to 1.91% at midday but it is thought it will come under pressure again as issues intensify in the eurozone.

British baby boomers approaching their retirement and looking to arrange their annuity income have been worst affected by the measures used to tackle the current financial crisis, particularly the BoE’s quantitative easing programme. The BoE initially put £200billion of printed money into our UK economy by purchasing government debt. But recently added to this, to take the total to £325billion – and that’s a great deal of money. The overall aim is to lower the government’s borrowing costs, which ought to have the effect of lowering the cost of debt right through the economy – for both large and small companies and for private individuals. However, QE has the obvious and unwanted side-effect of forcing down annuity rates, which are actually linked to gilt yields.

The BoE has argued that the pain suffered from falling gilt yields – and the lower annuity rates – should be offset by higher gilt prices: managers of pension funds normally switch their assets into gilts as the planholder approaches their retirement. Rates are also effected by life expectancy, which has continued to increase ahead of forecasts.

If you’re looking for the best annuity rates for your annuity income, give us a call on 0800 0124 374, or enquire online.

This move by LV= comes on the back of another leading enhanced annuity provider, Just Retirement, which brought in their break clause so that fixed term annuity clients could delay buying a lifetime annuity. John Perks, managing director of retirement solutions at LV=, stated that the inclusion of a break clause in their protected retirement plan terms and conditions actually means that a client is able to switch over to a more appropriate retirement contract if their circumstances change during their time in retirement. Everyone recognises that things happen in life that can’t really be planned for and the increased flexibility offered by LV=’s PRP, for both new and existing customers, makes it a stronger proposition in an ever developing market place.

Changes in a person’s circumstances covered under this new break clause includes the scenario where they become eligible for flexible drawdown, where unlimited funds can be drawn down so long as £20,000 per annum of income for life has been secured. Other circumstances covered include marriage, divorce or the premature death of a spouse or civil partner. The break clause can be utilised within 12 months of a change in a person’s circumstances and is available for both new and existing clients having an LV= PRP.

This is a worthwhile addition to enhanced annuity provider, LV=’s fixed term annuity contract. If you’re interested in this form of flexible retirement solution you should seek out specialist advice so you fully understand what’s involved. We can assist you; call us today free on 0800 0124 374 or enquire online to find out more.

In March, 2011, the European Court of Justice (ECJ) ruled that gender pricing for insurance plans will be banned from December 21, this year. This ruling, based on a challenge brought by Belgian a consumer group called Test-achats, followed an opinion given by advocate general Juliane Kokott that taking gender into consideration as a risk factor when pricing insurance plans is discriminatory. This decision will affect the way insurance companies provide your annuity quote, your life insurance premium, as well as income protection and critical-illness plans – if you’re taking out new plans.

Insurance companies offer customers different guarantee periods on an annuity quote. LV=, for instance, currently offers a guarantee period of 30 days, and their head of annuities, Matt Trott, states that they are considering reducing this ahead of the gender rules coming in on December 21. He said that a gender specific guarantee period for an annuity quote cannot go beyond December 21, so insurers have two options - to introduce gender neutral quotes early or reduce guarantee periods. LV= are looking at their options to find the best way to deal with this issue.

Mr. Trott states that clearly LV= wants to offer customers the best and fairest annuity rates they can, and the most obvious way in which to do that is to defer bringing in unisex annuity rates to as late as they possibly can.

L&G currently offers an annuity quote guarantee period of 18 days, and their head of annuities, Tim Gosden, states that this is an issue they are working through currently but that they have not made any final decisions yet – the key being to make sure that whatever they decide is communicated properly with both financial advisers and customers. The crucial thing for customers and advisers is that insurance companies conduct an orderly transition for any annuity rate changes with a clear timetable ahead of December 21.

If you’re looking for an annuity quote, we’ll compare rates for you from across the market. Call us free on 0800 0124 374 or enquire online today to find out more. You could be thousands of pounds better off in your retirement as a result – and that can’t be ignored.

There are various factors that will affect the annuity rates you get. Their are economic factors like stockmarket performance and global events like the current Euro crisis we are witnessing, and then there’s your own circumstances – such as where you live, your state of health and your lifestyle. Until the ECJ ruling comes into effect, gender also comes into the equation. On average, women actually live longer than men, so if all other factors are equal, under the existing rules for annuity rates women would receive a lower income from an annuity.

And, depending on what type of pension plan you have and who it’s with there may be additional factors that could affect the annuity rate you’re offered. Your pension plan might have valuable guaranteed rates and it could be a mistake if you opted out of taking them. It’s worth having a specialist adviser check out the terms of your pension plan, otherwise it’s possible you’ll lose out.

It’s very difficult for experts to predict whether annuity rates will actually be higher or lower after the ruling on gender comes into effect. As rates are based on various factors – as mentioned above – there are quite a number of variables that are pretty much unforeseen. The question of whether to wait until you buy your annuity will really come down to your personal circumstances and whether you need to take an income immediately.

You might simply want to keep a watchful eye on annuity rates in the run up to the gender rules coming into being. Whatever you decide to do about your retirement planning it’s always good to seek specialist advice, and that’s where we come in. Call us free today on 0800 0124 374 or enquire online to find out more. You know it makes sense.

He states that in one corner are those experts who argue that a fixed-term annuity isn’t really a good product for retirees because the retiree may be taking more risk than they should and in the other corner are those experts who believe that a fixed term annuity provides retirees with much needed and potentially important flexibility. However, a sub plot to this interesting debate on these ‘annuities’ is the realisation that the pensions industry and retirees are somewhere between a rock and hard place. The pensions industry needs product innovation and better retirement solutions for their various customers but is regularly accused of selling higher charged and more risky products.

Retirees are in a difficult place with annuities because annuity rates are at their lowest levels ever and they find it difficult to make what can be complex decisions about which of the various options are best for their particular circumstances. Therefore the question is how can product innovation be harnessed in such a way to provide retirees with solutions that meet their requirements?

The starting point is to appreciate what the retirees’ needs actually are. Mr. Burrows has written often about the five risks facing people at their retirement. These risks are: life expectancy, ongoing inflation, varying interest rates, equity values and health. The best outcome for a retiree is that his retirement income requirements are actually met in the future no matter what might happen to his personal circumstances or to stockmarkets.

If someone invests in a level income annuity and high inflation does return and interest rates go up, the retiree will be stuck with a retirement income that is reducing in real terms. If someone invests instead in fixed term annuity and interest rates go up and / or their personal circumstances alter in the future they will have a second chance – a second bite at the cherry – as they can invest in another contract when that policy matures.

Returning to the central issue of whether fixed term annuities will be the next mis-selling scandal, the answer really depends on the quality of the advice given. It’s true that the policies do transfer a lot of risk to the retiree but they also provide greater flexibility, and, providing financial advisers understand the various risks and are able to communicate these properly to the retiree there should not be any mis-selling. However, if these policies are sold by pointing out the potential advantages but without a clear explanation of the risks, there will be some potential for mis-selling. In such situations the FSA may point out that fixed term annuities are a form of income drawdown sale and will look for a higher level of advice than they would for an annuity sale.