View more on these topics

Pensioners facing less annuity cash as £17bn surplus hits gilt issues

The announcement of a £17bn surplus in the Budget has raised fears of a further fall in the value of annuities, plunging more pensioners into a funding crisis over retirement income.


Industry experts believe the surplus means that the Government will not need to make any further public borrowing, which will have a knock-on effect on the availability of gilts.


With fewer long-dated gilts available, the cost of annuities is likely to rise further as companies scramble to buy those that remain. This means that people will have to save even more to buy an annuity for their retirement.


Informed Choice managing director Nick Bamford says: &#34This is bad news for pensioners. We can do without further pressure on gilt yields. With increased life expectancy and lower gilt yields, it means that people will need to put even more money into their pension funds to compensate.&#34


Scottish Life head of communications Alasdair Buchanan says: &#34I predict that this will make it even more difficult for people to secure a competitive annuity rate, given the lack of long-dated gilts and the lack of need for Government borrowing.&#34


Scottish Equitable pensions development director Stewart Ritchie says: &#34The repayment of the Government debt implies that there will be fewer gilts in issue and this in turn suggests the price of those in issue will go up and, therefore, annuities will become even more expensive.&#34

Recommended

Loanback opportunity from capital allowances

For small and medium sized companies first year capital allowances on the purchase of plant and machinery at the rate of 40% are now permanently available. Small companies will also benefit from 100% first year allowances for investment in Information and Computer Technology equipment (computers, software and internet-friendly mobile phones) are available. Companies with SSASs […]

Company Cars

In order to protect the environment, proposals have been made to increase the tax charges on company cars. There are those that apply from 6 April 1999 and those that will apply from 6 April 2002.From 6 April 2000 the car benefit charges will continue to be:-■ 35% of the list price ■ 25% of […]

Abolition of ACT gives “its” a boost

Deutsche Bank says that the abolition of Advance Corporation Tax and the on going &#39its&#39 campaign have provided an opportunity for investors. It forecasts benefits from deregulation of European stock markets and greater harmonisation of tax in the EU.On-line internet dealing will revolutionise the sector for private investors and retail investors will own 55 per […]

CML rejects consumer over-spend claims

Mortgage providers have dismissed industry watchdog concerns that homebuyers are overstretching themselves by borrowing too much.The Council of Mortgage Lenders says the latest figures on mortgages showed homebuyers had not increased the amount they borrowed compared to the value of their house.The CML said in February the average first time buyer borrowed 78 per cent […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment