Pension annuities: a market update
The good news is that annuity rates are stable despite volatile markets, but we do have the arrival of postcode annuities.
In the last couple of weeks the only reported changes to annuity rates were an increase from Canada Life and changes from Prudential and Norwich Union to reflect their move to postcode annuities.
In the coming weeks we could start to see a downward move with annuity rates with pressure on gilts and bonds yields. We may see a response to calls for lower interest rates because of the concerns about a slow-down in the economy. The good news is that competitive pressures in the annuity market may act to keep rates stable.
Many people have expressed fears that the better-off will end up with less annuity income from their pension savings as more companies move to postcode annuities and life-style annuities. However, in the short term there is no sign that there will be any significant change.
The issue for many of those with larger funds is not annuity rates, where movements are small and infrequent, but the investment of their pension funds, considering the current volatility of stockmarkets around the world.
