Annuity rate fall means less income for pensioners

07/04/2009

Pensioners are facing a sharp fall in their retirement income, a report has indicated.

The Alexander Forbes Annuity Bureau study shows that the best annual income that can be currently bought by the typical 60-year-old male retiree has dropped by £320 to £6,440.

Retirees generally convert their pension savings into a retirement income through buying an annuity, which they can do up until the age of 75.

Rates for annuities have been dropping since last summer and have retreated by ten per cent so far.

Alexander Forbes suggested that this trend would now continue, due to recent policy actions from the Bank of England.

The Bank has slashed interest rates to an all-time low and recently began a programme which is the modern equivalent of printing extra money.

Both moves are aimed at promoting economic recovery from the current recession - but also have the effect of depressing annuity rates.

Tim Whiting, director of the Alexander Forbes Annuity Bureau, said: "It has never been more important for people retiring to shop around for the best annuity as the difference between the best and worst annuity could make hundreds of pounds difference to a person's annual income."

Tags; Income Worries and Debt, Retirement Money Problems,

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