The last 20 years have seen significant changes to the options available for those retiring and taking benefits from pension schemes. Typical levels of annuity income can be 40% of 1990 levels whilst at the same time life expectancy has improved by an average of 8 years for males aged 65.
Providers of income in retirement for pensioners have responded with a range of developments that offer choice, sometimes with added complexity. To cut through the we’ve teamed up with DMP Financial to offer a guide – STOP before you buy an Annuity. Download your free copy.
1.) Declining annuity rates
- In 1990 a £100,000 pension pot would buy a pension of £15,640 per annum (15.64%)
- In 2000 the same pot would have bought a pension of £9,120 per annum (9.12%)
- In 2010 the pot would currently buy a pension of £6,270 per annum (6.27%)
(*figures based on a male aged 65, single life, source DMP financial )
2.) Life expectancy has increased dramatically
- In 1981 a male age 65 expected to live to 79
- Today he can expect to live to 87
- Annuity providers annuity payments have increased 50% due to longer lives
3.) Improved choice of retirement options
- Annuities have changed offering enhanced & impaired rates but once purchased you cannot changed/adapt.
- Drawdown has brought true income flexibility, improved death benefits and tax efficiency but there is still market risk.
- Flexible or variable annuities offer income certainty, improved death benefit, access to market growth while protecting against market drops.