Worrying time for pension buyers

Article Abstract:

United Kingdom annuity rates have dropped, and this creates problems for investors buying an annuity. Investors should still benefit from rising investment markets until May 1998, which have boosted the value of their pension funds. Investors should move funds out of equities before they plan to retire, otherwise drops in stock prices can erode the value of their funds. Investors can defer purchasing an annuity, but there is no guarantee that annuity rates will rise, and they forego income while they wait.

Retirement planning

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A nasty shock three years on

Article Abstract:

United Kingdom investors using income drawdown plans can defer the purchase of annuities when they retire and use their pension funds to provide an income. The plans can give investors more flexibility, but they can present problems for investors taking the maximim possible income. The income will be cut after a three-year review, due to a drop in government bond yields. Volatility in stock markets may also create problems for investors, since stock prices have dropped since a peak in Jul 1998.

Pensions

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