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

9 January 2013 last updated
Pension annuities benefit as FTSE index at pre-financial crisis high

The FTSE-100 index has increased to 6,099 the highest point reached since the financial crisis started in 2008 giving retirement income a boost when buying pension annuities.

Equity markets have been rising in January and are now back at the level of 2008 although the FTSE-100 index was above the 6,000 during the first half of 2011.

For pensioners retiring this has countered the drastic fall in annuity rates over the last 18 months where the 15-year gilt yields have reduced by 147 basis points taking annuities to an all time low today.

Risks remain in the equity market and pensioners current invested and purchasing their annuity should consider converting their fund to cash to avoid a sudden fall in pension fund value. Falls do occur frequently and if a pensioner cannot wait for a recovery they would have to accept a lower fund and lifetime income from a pension annuity.

Pension annuities gain as FTSE higher
  More annuity topics
  January News 2013
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2019
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Income from annuities higher due to equities

Since the FTSE-100 index reached a low on 4 October 2011 of 4,944 it is now up 23.3% and this gain would be similar if a pension fund was invested in tracker funds reflecting this index. Over this period of time annuities have reduced significantly and for a male pensioner aged 65 with a £100,000 could purchase a single life, level annuity for £6,093 pa in October 2011.

By January 2013 this has reduced by £668 pa or 10.9% to £5,425 pafor a fund of £100,000 and taking into account the rise in equities the fund would now be worth approximately £123,300 and even though annuity rates are lower the income would be £6,687 pa, increasing £594 pa or 9.7% over the worst case scenario.

However, over a slightly longer period of time when the FTSE-100 index reached a high of 6,000 in June 2011 annuity rates were much higher and for £100,000 the income would be £6,806 pa. Today the fund would be slightly higher at £101,650 and the income from an annuity £1,381 pa lower so the lifetime income from this slightly higher fund would be £5,514 pa, representing a decrease of £1,292 pa or 18.9%.

Annuity rates still poor value for money

The above examples demonstrate that current high equity values improve slightly over the worst case scenario but are still a long way off the income levels in June 2011 and earlier. For a male aged 65 the Office of National Statistics (ONS) would expect him to live for 17.6 years and based on the £1,292 pa lower income level means over his lifetime he will be a substantial £22,739 worse off.

If pensioners cannot wait for UK annuities to recover, there are ways to generate more initial income from an annuity. Incomes of up to 30% more than the standard open market option can be paid using a
with profits annuity or investment backed annuity. This would be suitable if pensioners have other income from a final salary pension or more than one personal pension fund as there is a slightly higher risk as the income can go down as well as up over time.

Lifestyle medical conditions such as high blood pressure, Cholesterol, are a smoker or being overweight would attrach a higher income from an enhanced annuity. For more severe health issues such as diabetes, heart conditions or cancer an impaired annuity could offer up to 40% more than the highest standard annuities.

News related stories:
Pension annuity income and equities rise after fiscal cliff deal reached
Annuities income reduce as equities fall with fiscal cliff deadlock
Pension annuities income and markets boosted with Greece deal
Pension annuity income and markets lower with US fiscal cliff
Pension annuity income lower as market falls after poor US earnings
Pension annuities gain as bailout for Spain sees markets up
Related internet links:
Guardian - FTSE-100 hits pre-financial crisis levels
Annuity Rates
  Age Single Joint  
  55 £4,273 £4,019  
  60 £4,695 £4,418  
  65 £5,361 £4,913  
  70 £6,172 £5,708  
£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:

UK enhanced annuities rise
UK enhanced annuities rise

Stronger economic data from China and the eurozone send annuities higher

Enhanced annuity rates down 3%
Enhanced annuity rates down Enhanced annuities reduce by -3.31% as gilt yields fall by 28 basis points
Annuity fall with Brexit uncertainty
nnuities fall after Brexit uncertainty Brexit uncertainty sends investors to safety of gilts lowering yields and annuities
UK annuities could rise with higher yields
UK annuities fall Yields rise by 18 basis points after improved prospect of US and China trade deal
Gilt yields rise and Trump delays tariff
Gilt yields rise as Trump delays tariffs

Donald Trump delays $200 billion of tariffs on Chinese goods pushing up yields

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook Page Twitter Page   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-19 All Rights Reserved