Planning for Retirement
Annuity rates hit their lowest level since 1994 in September, with implications for those making retirement decisions.
Since the introduction of pensions flexibility in 2015, annuities have become much less popular as a way of converting a pension fund into income. The most recent figures from the Financial Conduct Authority show that over five times as much money is now placed into income drawdown than goes towards annuity purchases.
Annuity rates have been back in the news, with several press reports citing calculations from the Moneyfacts comparison website that rates had hit their lowest level in 25 years. According to the data, a 65-year-old purchasing an ordinary pension annuity, with no increases in payment and no minimum payment period, could expect to receive just 4.1% – £410 a year per £10,000 of investment. That was a significant drop from the start of 2019, when an extra £58 a year was on offer.