Pension annuity rates, 2010. Will they be better UK annuity rates? Well, what is next for pension annuity rates in the UK? Annuity rates will only start to increase if gilt yields increase. This is likely to happen sometime in the hopefully not too distant future if the government’s current policy of printing more money, quantitative easing (QE), results in higher inflation as is expected shortly. This is because people investing their cash will demand a higher return in the way of interest rates for locking away that cash if they think ongoing inflation will erode the overall value of their investments.
However, any gains resulting from increased yields could be wiped out if insurance companies (these are the annuity providers, don’t forget) continue to increase their predictions of overall life expectancy. Other factors such as the continuing developments of different types of annuity, such as the enhanced annuity and the postcode annuity will create winners and losers by increasing UK pension annuity rates for some, while pushing these rates down for others. If you live in less wealthy parts of the country, such as perhaps around Glasgow (not that I’ve got anything against that lovely city, but it’s often mentioned in this scenario), or of you have an unhealthy lifestyle and maybe in poor health you will get higher annuity rates than someone living in the leafy suburbs (Surrey, possibly) with a healthy lifestyle and considered to be of good health.