Yes, it doesn’t either go away or get better. There is more bad news coming from Equitable Life, and all because of those guaranteed annuity rates they offered all those years ago. Their reported excess assets have fallen by a third.

Their measure of financial strength fell by a third in 2008 as the society, which closed to new business some eight years ago, was hit by the combined ‘double whammy’ of falling asset prices and rising bond yields. Mind you, nothing compared to the suffering faced by their many annuity planholders.

Equitable Life revealed that its excess realistic assets over liabilities fell around £207 million to £414 million last year. In preliminary annual results it noted considerable uncertainty over the future but remained confident that its finances were ‘sound’ and that it remains a ‘going concern’. We sincerely hope this is the case for this troubled pension annuity provider.

The society’s biggest concern as it proceeds into winding down the business is expenses. As its £6 billion with-profits fund diminishes the proportion of fixed costs will rise. It is in talks with a number of external third party administrators about entering into a long-term contract. It also indicated it was looking to organise another restructure and shed even more staff.

The with profits fund suffered a net investment loss of 7.7% last year after costs of administration and guarantees (those guaranteed annuity rates again), following a 1.8% return in the previous year. It cut planholders values by around 2% last month, after a slightly bigger cut was made in December. The combined effect of these two cuts wiped out the gains made in 2007.

Equitable guarantees a minimum annual investment return of 3.5% for the majority of its policyholders. The cost of this went up from £814 million from £442 million. Guarantees are an extremely sore topic for Equitable. It was the cost of guaranteed annuity rates, which the Lords forced Equitable to honour, that crippled it in 1999 and led to its closure the following year.

The outgoing chief executive stated that with careful management it continues to ride out the most challenging of financial conditions, and it continues to look for the best outcomes for policyholders, adding that progress is being made with negotiations for a long-term administration agreement which will offer some expense security for the future.

Just Retirement, a provider of enhanced annuity and impaired life annuity products, has seen its’ sales dip but accelerated takeover talks. Sales fall 8.6% over the past year, according to half-year results.

Annuity sales were primarily responsible for the fall in new business figures, though Just Retirement says it has opted to focus on margins rather than quantity in the increasingly competitive annuity space, and it stated that it is involved in ongoing takeover talks, and says it will make further announcements on a potential offer in due course.

Total sales for the final six months of last year were £353.9m, down from £387m in the same six month period of 2007. Sales of annuities fell 13.1% to £272.1m, while their equity release business grew, up 10.7% to £81.8m.

IFRS underlying profits were up to £7.4m after tax, up 54.2% from £4.8m in the final six months of 2007, leading to them to comment that their selective pricing policy has enabled them to protect pension annuity margins in the face of increasingly strong competition, albeit at a cost of a small,  temporary reduction in sales.

And, the recent reduction in annuity rates across the market has had a positive impact on the firm’s business levels early this year. They are currently experiencing historically unprecedented levels of annuity applications which will positively impact fourth quarter sales.

Certainly, if you have ill health, or smoke, Just Retirement’s annuity quotes could be the ones for you.

Pensioners are likely to be amonst the first victims of quantitative easing, as experts predict that the government’s plan will knock 10% off annuity rates.

Millions of pensioners have good reason to smile (a little) because the Basic State Pension is uprated in line with the previous September’s Retail Prices Index (RPI), rather than the zeroflation we are currently witnessing. Therefore, pensions will rise by 5% from April, which, considering everything else financial, is a bit of good news.

But those hundreds of thousands of people approaching retirement will not be so lucky. They are among the first victims of the government’s ”quantitative easing” (QE) plans. Why, you might ask? Well, annuities, the guaranteed retirement income that most savers with money purchase or defined contribution pensions buy at retirement, are based on gilts, another name for bonds that are issued by the government. QE entails buying back vast large amounts of these gilts, and this has pushed up their price and forced down their yield, (the income paid by these bonds expressed as a percentage of what they cost to buy on the stock market).

What this all means is that for people unlucky enough to be forced by when they were born to have to turn a lifetime’s pension saving into a retirement income today, is that the annuity quotes they get are some 10% less than a year ago.

Let’s look at this in cash terms, this would mean a 65-year-old man retiring with a £100,000 pension fund will receive £805 less annuity income than he would have got a year ago. If this man has an average lifespan, that means he will receive £17,000 less than if he had bought his annuity a year ago. 

If more pensioners understood what is going on, it wouldn’t just be younger folk rioting outside the G20 economic summit in London’s docklands this week.

However, have you noticed that the FTSE 100 index of Britain’s 100 biggest shares has risen by 13%  since the start of this month, or the Dow Jones in American 22%? Probably not. It isn’t bad news so it didn’t get reported.

Why are we still re-vamping this annuity website, you might ask. Well, the simple answer lies in the fact that (a) we want to stay ahead of the competition, and (b) that we want to keep you informed of your retirement options.

The world has changed over these past months, and people have lost confidence in most things financial, leading to people postponing their annuity purchase, unsure of what to do. Trouble is, if nothing is done you can’t start receiving any income or get at your tax-free cash entitlement.

You can’t wait forever for your pension fund to recover in value, or for annuity rates to recover. No, you should explore your alternatives, and now, if you want to start living your life in retirement.

And it’s not all about annuity quotes these days, and there are some very good, flexible, alternatives out there, such as the flexible income annuity from the Prudential. Check it out. It might just be right for you.

You could get a bigger income from your pension pot…if you are prepared to risk leaving your pension fund invested in the stock market. You could take an annual income which could be hundreds of pounds higher than you would get from an annuity with the best annuity rates.

Unsecured pension (USP), previously income drawdown, allows you to draw an income directly from your pension fund and without the need to purchase an annuity. (Reminder; an annuity converts your pension pot into a guaranteed income for your time in retirement.)

No doubt you could be pleased about this if you hate the idea of sacrificing your depleted pension pot to an annuity provider and being stuck with low annuity rates for the rest of your life. Clearly, USP sounds like a good solution. But is it?

With USP (income drawdown), your pension fund remains invested in the hope of providing more capital growth over time. The idea is that the fund performs sufficiently well to provide you with a better income than you would have got from a pension annuity. 

Many people use USP for a period of time, before buying an annuity with their remaining pension fund later on. This is because retirees can only leave their money invested in a pension until the age of 75.

But if you want, after you turn 75, you can still avoid buying a pension annuity by choosing an Alternatively Secured Pension (ASP) instead. ASP is broadly similar in many ways to USP. It enables you to carry on taking an annual income from your invested pension fund well into your retirement.

The income you take from USP is covered by limits set by the Government Actuary’s Department (GAD), allowing you generally to take up to 120% of the income that would typically be provided by a conventional annuity for someone of your age, gender and size of pension fund. You can vary the income taken between zero and the maximum.

The maximum income a male aged 65 can take from USP is currently £8,160 a year. But if he chose the very best conventional annuity rate available on the market today, he would get an annual income of just £7,375 a year. So, with USP he could be up to £785 better off each year. This is based on a £100,000 pension fund.

USP is more flexible than an annuity. The income you take can be varied. If your pension fund performs well, the extra capital growth you get may allow you to draw a larger income than you would get from an equivalent pension annuity.

Death benefits are much more generous under USP. They can provide a pension for your dependants,  pay them a lump sum, or a combination of both. Lump sum death benefits do, though, attract a 35% tax charge. By contrast, annuity income is completely lost on your death unless you pay for a guarantee, and even then it will only pay out for a maximum of 10 years if you die sooner.

Delaying your annuity purchase could be beneficial. That’s because annuity rates will be higher as you get older, so you should enjoy an age governed uplift when you come to buy one.

If you’re currently invested, your pension fund is likely to have suffered losses over the past months, and, by buying an annuity now, you would crystallise those heavy losses. If you believe the stock market might recover over the next decade, it may be better to remain invested.

A pension annuity offers a guaranteed income for life, and you will not get that sort of peace of mind with USP, and, the charges are generally higher for USP than an annuity.

Annuities are pretty simple to understand. USP takes an effort from you in to understand and choose  investments and monitor performance. You will almost certainly need the help of a specialist.

That’s quite a lot of pros and cons to mull over, and USP is only one of many retirement options open to you. It is really only suitable if you have a pretty large pension fund to start with, mainly because of the investment risks involved and the ongoing charges.