My Pension Expert reveals 3.882% fall in the standard annuity rate
Doncaster, South Yorkshire (PRWEB UK) 22 September 2014 -- New research from My Pension Expert has revealed a 3.882% fall in the top standard annuity rate. The large drop occurred during a four week period between the 12th of August and the 9th of September and comes as a significant blow considering how resilient to the Budget changes the rate had been previously.
The study reveals that a 64 year old retiree with a £100,000 pension pot would have been able to receive a top rate of £6031 on the 12th of August, compared to £5799 on the 9th of September. That’s a £232 fall over the course of four weeks, that’s a £4,640 difference when allowing for the fact that the average retirement lasts for twenty years.
This reduction isn’t exclusive to the top rate, the average rate has also fallen by 3.241% during this period. This means that it doesn’t just affect those who are savvy enough to exercise their Open Market Option but people right across the annuity market.
Considering how well the standard rate had weathered the pension freedoms announcement in comparison to the enhanced rates it is clear another factor is responsible for the drop. The answer lies with what has happened to Gilt yields during the month of August, which have seen a decrease in their levels from 3.05% to 2.70%.
On the 29th of August the 15-year Gilt yields fell to 2.70%, their lowest level for the year. As Gilt yields performances and annuity rates are intrinsically linked this fall has triggered a corresponding response from standard annuity rates.
Scott Mullen director at My Pension Expert said:
“There has always been a direct correlation between how Gilt yields are performing and annuity rates. Therefore it’s only natural given the recent dip in Gilt yields that annuity rates have followed suit.
“Despite the new freedoms and reduction in the rate there will still be people for whom an annuity is the right retirement option. For them it is essential that they exercise their Open Market Option and divulge any health and lifestyle factors, as they may affect the amount a provider will offer. It is not uncommon for people to receive up to an extra 30% by doing this, so it really pays to take action.”
Scott Mullen, My Pension Expert Ltd VPR, +44 1302453009, [email protected]
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