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Pensions suffer again, as Annuities continue to fall

Pension annuity rates, the amount you are paid as a regular income once you retire, have fallen again, in the biggest drop since 2002.

This is according to a report by Moneyfacts, who have revealed that so far this year the average income generated by an annuity for a 65 year old male has fallen by 8.6pc. The report also found that, unless annuity rates can stage a miraculous turnaround in the fourth quarter, it will be the fifth consecutive year of average annuity decline.

Moneyfacts have outlined the fact that the annuity market has never been less competitive; making it possible for providers to offer what would usually be uncompetitive rates in a blossoming market. However this means that growing numbers of retiring people are refusing to buy annuities due to the disappointing rates of return.

The fall in rates is dramatic and this can be seen when comparing the average income from savings today compared to that of 20 years ago. In the early nineties a pension pot of £100,000 would have provided an average income of £18,000 per year, however the same amount in today’s market would see a pensioner receive just £6,000 per annum. The cause of this can be attributed to a series of factors. These include poor stock market performance, falling interest rates, longer life expectancy and inflation.

If you have any questions about your pension, its performance, or are worried about possible low returns once you retire, please contact one of our advisors for a free, and we will get back to you within 60 minutes.

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