Annuities: to buy or not to buy

Article Abstract:

United Kingdom annuity rates have dropped as a result of a drop in government securities yields, in turn linked to expectations for interest rates and inflation. It is unclear whether annuity rates will improve, and whether it is worth waiting to bu an annuity. They could improve if inflation expectations change, but greater longevity means they could also worsen. Wealthier investors can use phased retirement schemes or drawdown plans. Annuity rates also vary between providers.

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When drawdown makes sense,(options for annuities in the UK)

Article Abstract:

UK investors can defer buying an annuity until they reach 75-years-old, using the income drawdown method which means that income is taken from the pension fund directly until they reach that age. Annuity levels depend on interest rates which may be low, and once an annuity is bought there is nothing left if the person buying the annuity dies. Drawdown allows investors to wait in the hope that interest rates will rise, and to leave a pension fund to a spouse or other dependent.

Personal finance

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More choice of annuities offered

Article Abstract:

Advice is set out on buying an annuity in Britain, including recent developments in this area.

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