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Cost of male annuities up by 29%


The size of pension pot needed to buy a male annuity has gone up by almost a third between December 2009 and March 2013, a report from the Office for National Statistics reveals.

The ONS Pension Trends report, published this week, shows that in order to receive an annual income of £5,000, a 65-year-old single man would have needed a pension pot of £118,000 in December 2009.

To buy the same level of income in March 2013, he would have needed a pension pot of £152,800, a rise of 29 per cent.

Women have seen a 14 per cent increase in the size of pension pot needed to buy a £5,000 annuity, from £133,500 to £152,800. 

Annuity rates were equalised for men and women in December 2012 following the European Court of Justice ruling in March 2011 that insurers cannot price products based on gender.

The ONS calculated the savings required to receive certain levels of retirement income based on data from its Wealth and Assets survey, and using the best annuity rates available on a single life, inflation-linked basis using quotes from the Money Advice Service.

Yellowtail Financial Planning managing director Dennis Hall says: “We are in a period of low inflation where there is a depressed value for gilts which is pushing up the costs of buying an annuity. Until we see that change, this is going to be a problem that faces all retirees.”


UK wins B2L and guarantor mortgage carve outs in Euro directive

Buy-to-let and parental guarantor mortgages in the UK will avoid new EU rules after officials won a series of key carve outs in final negotiations for the European mortgage directive. Final negotiations between the European Parliament, Council of Ministers and European Commission concluded last night and it was confirmed that UK buy-to-let mortgages will receive […]

Govt told to scrap DB pensions indexation rule

The Government is facing calls to scrap rules which force defined benefit pension schemes to increase payments in line with the limited price index. Under existing rules occupational DB schemes must increase the value of pensions paid by at least LPI, which is capped at 2.5 per cent. The LPI rule applies to all DB […]


Aviva axes direct advice arm

Aviva is to stop offering face-to-face investment and protection advice for its customers from 31 May. The move, which comes as part of the 2,000 job cuts announced by the insurer last week, will affect approximately 120 advisers, most of whom are field-based. Around 10 adviser roles will be retained to look after existing customers. The announcement […]

Naming a reward programme

Six tips to get your reward programme name right

by Debra Corey, group reward director  Choosing a name isn’t easy. Whether it’s for your new puppy, a bundle of joy or your reward programme, a name determines a first impression – and often a lasting memory. When it comes to your reward programme, the name will determine how your employees feel about it even before […]


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