Annuity Rates, Annuities, Pensions, Divorce Annuity Rates Charts
Home News Annuity Rates Annuities Pension Annuity Impaired Annuity Annuity Quotes Pensions Divorce Resources
   


10 October 2012 last updated
Annuity income falls as S&P downgrades Spain's credit rating

Equity markets have seen decreases as Standard & Poor's reduce Spain's credit rating and for pensioners invested in equities this means a lower income from their annuity.

Standard & Poor's have downgraded Spain's credit rating by two notches from BBB+ to BBB- which is one stage above junk status and reflects the deteriorating situation in the country. In particular the rising unemployment and continued austerity measures are likely to continue the recession and the new rating reflects the negative future outlook.

The reaction is lower equity markets with the FTSE lower by 93 points or 1.5% this week and the Dow Jones index lower by 266 points or 1.9%. For any pensioner retiring now with their pension fund remaining invested in equities their fund will have reduced. A smaller fund means a lower pension annuity for their lifetime as once an annuity is purchased it cannot be changed.

 
Spain rating decreases annuity income
 
  More annuity topics
  October News 2012
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates
 

Income from an annuity 1.5% lower for pensioners

With the lower equity markets pension funds with a similar volatility to the FTSE-100 index will have reduced by about 1.5% and this immediately means a lower lifetime income for pensioners. For example, a male aged 65 with a fund of £100,000 could receive income of £5,664 pa at current annuity rates.

With the recent decrease in equities the fund has reduced to £98,500 and the annuity income would be £5,579 pa or an £84 pa reduction. The Office of National Statistics (ONS) would expect him to live 17.9 years so over his lifetime he would receive £1,478 less income.

Avoiding a lower annuity income

When approaching retirement pensioners should consider the level of equity markets. In October 2011 the FTSE-100 index was at 4,944 and has increased 927 points or 18.7% to 5,871 on 5 October 2012 which is a significant gain. Before taking their annuity pensioners should switch their fund to cash to prevent any sudden decrease in the value of their fund just before they purchase their annuities.

The open market option can take up to four weeks to transfer funds from the existing provider to a new provider and markets could decrease by up to 10% as a result of global events. Many pensioners would then be faced with the option of accepting a lower annuity income for their lifetime or delaying taking their pension in the not receiving an income until later and in the mean time lose the opportunity to receive an annuity while they wait.

Pensioners could benefit from a with profits annuity or investment backed annuities that will offer a 30% higher starting income than the standard open market option annuity, if they are prepared to take more risk as they have other pension income.

An impaired annuity could be considered if they suffer from poor health such as high blood pressure, Cholesterol, are a smoker, have diabetes, heart conditions or cancer. If they have been hospitalised, take prescribed medications and even if they are obese they may receive an enhanced annuity up to 40% greater than the income offered by the standard open market option annuity.

News related stories:
Pension annuities gain as bailout for Spain sees markets up
UK annuity rates can increase with ECB bond buying plan
UK annuities would be lower if Eurozone AAA rating downgraded
Related internet links:
Bloomberg - S&P downgrades Spain
Telegraph - S&P downgrades Spain's credit rating
Annuity Rates
  Age Single Joint  
  55 £6,361 £5,898  
  60 £6,842 £6,244  
  65 £7,474 £6,843  
  70 £8,405 £7,660  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
  Annuity Rates  
Annuity Quotes
  Plan your annuity and get quotes from the 12 leading providers  
 
  free annuity quote Free Annuity Quotes
  annuity quote no obligation No Obligation
  annuity quote all providers From All Providers
 
  Annuity Quote  
  Annuity Rates News:

Annuities rise 6% to eleven year high
Annuities rise 6% to 11 year high Annuities rise 6% and gilt yields increase 90 basis points due to central bank action
Gitl yields rise 87 basis points
rise 87 basis points Gilt yields higher as investors shrug off global recession fears as base rates rise
Retirement income at record high
Retirement income soars Retirement income rises by 71.6% as yields and annuities are driven higher
Pension annuities fall on recession fears
Pension annuities fall Pension annuities fall and gilt yields are lower by -27 basis points to 2.32%
Annuity rates rise but yields weaken
Annuity rates rise 7pc last month Annuity rates rise by a record 7% for a single month but gilt yields weaken

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook Page Twitter Page
Sharingpensions.co.uk   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-22 Sharingpensions.co.uk. All Rights Reserved