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Aegon withdraws guaranteed pension plan

In a fresh blow for the UK pension industry Aegon has been forced to withdraw its flagship 5 for Life Variable Annuity which guaranteed a minimum 5% annuity rate on pension arrangements. The plan will be replaced by the Secure Lifetime Income plan at the end of June which will also be a variable annuity arrangement but with no guaranteed minimum.

Slowly but surely we have seen a gradual reduction in annuity rates over the last decade due to a number of factors including falling investment returns, pension plan costs and a change in the lifetime expectancy of the UK population. The situation was also impacted by historic forecasts from various government actuaries which proved woefully incorrect. When you consider that annuity rates have fallen, final salary pension schemes are on the way out and more and more people in the UK are struggling to save for their future, the situation is now serious.

Taking into account the fact that the state pension has been falling in value in real terms for many years we are seeing more and more pensioners fall under the minimum income levels promoted by the UK government. Poverty is now a real problem for the older generation and many are finding it very hard to cope with.

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