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IFAs expect further falls in annuity rates

Many IFAs are expecting annuity rates to fall over the next 12 months, with 80 per cent expecting a 2.5 per cent drop, according to Key Retirement Solutions.

A survey of 50 IFAs showed that 15 per cent were even more pessimistic, predicting annuity rates would fall by 5 per cent or more while just 5 per cent of advisers expected rates to stay the same.

KRS says falling annuity rates and rising house prices mean retired homeowners should look to access income through the huge wealth tied up in their property.

The IFA estimates that retired homeowners have seen the equity in their homes increase by 13 per cent to £688bn from £611bn in the last year.

The equity-release specialist is publishing a free consumer guide that explains the types of home-income plans and equity-release products on the market.

Managing director Colin Taylor says: “Many pensioners have had to endure annuity rates falling by 12 per cent last year and they could fall further as life companies continue to adjust to increased life expectancy. This, coupled with poor stockmarket returns, means that many are becoming increasingly cash-poor but equity-rich as the value of their homes increases.”


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