The FTSE group has launched a new annuity index, allowing users to track changes in the value of pension funds against shifts in annuity prices.
Legal and General Investment Management helped create the FTSE UK Level Annuity Index Series, with annuity rates provided by The Annuity Exchange. The daily index will use the average of the three highest annuity rates for funds at different stages of accumulation.
FTSE research and analytics managing director Peter Gunthorp says: “As investors approach retirement age, they increasingly review the cost of annuities. FTSE has created this new UK Level Annuity Index Series to provide users with greater insight into the market, which will prove to be a vital new tool for defined contribution savers attempting to meet their retirement objectives.
“With automatic enrolment on track to create nine million new UK DC savers by 2018, we believe products of this nature will continue to grow in demand.”
LGIM head of investment Aaron Meder says the index “represents a significant step forward” for the industry.