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Pension payouts plummet over decade

Pension payouts have more than halved over the last 10 years, says personal finance research firm MoneyFacts,

In July 1996, a male retiring at 65 who contributed a gross annual premium of £500 into a with-profits personal pension for 15 years would on average have built up a pension fund worth £25,840 or a unit linked fund of £19,709.

But a person retiring today on the same criteria would receive an average with-profits pension of just £12,306 or unit-linked pension of £11,696.

This represents a 52 per cent fall in the average with-profits pension payout over the last decade and a 40 per cent drop in the average unit-linked pension.

The figures are even more gloomy for longer-term with-profits pensions, with the average 20-year with-profits pension payout falling by 57 per cent from £61,592 in 1996 to £26,168 today.

The problem has been further compounded by a decline in annuity rates over the past 15 years. A 65-year-old man who could have secured an annual income of £1,139 from an annuity purchased for £10,000 in 1996, can only expect an income of £686 in today’s market.

Hargreaves Lansdown head of pensions research Tom McPhail says: “The catastrophic decline in annuity rates was all right when fund rates were high but now they have declined and investors are getting the worst of both worlds.”


L&G in letter blunder on tax-free cash

Legal & General has admitted mistakenly sending letters to customers warning of year-long delays in calculating tax-free cash on EPPs. It says the maximum processing time is actually 12 weeks, not 12 months, as the letter states. L&G says it is struggling to perform the calculations as quickly as usual because of a significant increase […]

On the home front

The coup in Thailand came at an unfortunate time as far as I was concerned. There I was in a television studio, with the first interview completed. I was awaiting the next opportunity to share my opinions on what the market might be about to do when the news broke and my thoughts on Footsie behaviour became relegated to the cutting room floor. Not that the coup appears to have had any great implications. With tourism such an important element on Thailand’s economic mix, the army generals went out of their way to explain that their intervention was a temporary necessity and that everything would be returned to normal as swiftly as possible.

Posos could cut proc fees

The launch of instant offers in the sub-prime market could signal a reduction in proc fees for brokers, according to Openwork mortgage proposition director Paul Shearman. He believes the fact that brokers will have their work cut less with such technology means that lenders may start offering reduced fees. Some commentators have recently slammed the […]

FSA urges industry to prepare for bird flu

The FSA is to lead a six-week exercise to test the resilience of financial institutions in the event of an avian flu pandemic starting on October 13.In a speech to the Lord Mayor and assembled guests at Mansion House in London, FSA chairman Callum McCarthy said 60 organisations will be responding to a scenario that […]


What employers should expect over the next five years

A major feature of our articles is looking into the Jelf Employee Benefits crystal ball to predict changes and trends that may influence the short and medium term shape of UK employee benefits.  By flagging such changes early we aim to provide our followers with the tools to make sensible and informed decisions on their benefits offerings.


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