What does a change in annuity rates mean for retirees?

Annuity rates are at an all time low. The on going crises in the Eurozone and the falling demand because of increased prices for government gilts – used to buy back annuities – is putting negative pressure on annuity rates, so much so that retirees are now really feeling the pinch.

According to The Telegraph, a 65-year-old man with £100,000 available to buy an annuity will now get just £6,003 per year. This is down from £7,157 in 2010. And, not everyone is lucky enough to have £100,000 saved up and available to buy an annuity.

To make matters worse, the latest annuity rates look set to fall further if accountancy consultants Deloitte are to be believed. It expects rates to fall by as much as 20% by 2014 as new EU rules on solvency take action.

Retirees should thus be wary about annuities right now. Of course everyone with a pension and who has built up a lump sum must have an annuity before the age of 75, so there is no getting out of them. But picking the right one has now become even more important. Additionally, once you have bought your annuity that’s it; there is no chopping and changing to be done at a later date if you don’t like what you’ve got. So it pays to shop around and take out sound, impartial financial advice.

Legal and General is one of the best providers of annuities in the UK. In 2011 is decided to increase its surplus capital from £3.7 billion to £3.8 billion – above the minimum set by the Insurance Group Directive. The latest annuity rates can be attained by speaking to a member of the customer service team but a handy annuity calculator is provided on the Legal and General website to give you some idea of how much you could get.

If you are really worried about the poor state of the latest annuity rates you could take action now that may help you get a better rate. As annuity rates are linked to health and lifestyle, you should now consider reeling in your spending and cutting back on excesses if you haven’t already. Additionally by keeping fit, healthy and active through good diet and exercise you are more likely to get a more attractive annuity rate.

You can find out more about the latest situation on The Telegraph’s website.

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