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Warning on deferrals

Falling annuity rates mean deferring annuity purchases can cost pensioners hundreds of pounds a year, GE Life is warning.

If an investor with a 100,000 fund deferred purchase from last August, the 12-month peak for annuity rates, to February 2004, they would have lost over 250 annual income for life.

Investors who withdraw some of the fund to invest and get a better return ahead of a later annuity purchase need strong growth rates and a sharp spike in annuity rates to even stand still, claims the company.

If an investor had withdrawn 6,000 of a 100,000 fund to invest, they would need a 5 per cent return net of tax and charges and a 6.5 per cent rise in annuity rates to cover the cost of deferral, with even greater returns needed to profit from the move.

Annuities manager Matt Trott says while annuity rates have been falling so has inflation, so investors’ real rate of return has been sheltered to an extent.

Trott says: “Advisers deferring annuity purchases for their clients while waiting for annuity rates to go back up need to consider what rate of investment return they need to achieve just to stand still.”


Winterthur poach Rennie from Lincoln

Vincent Rennie is joining Winterthur Life as chief investment officerfrom Lincoln Investment Management, where he had a similar role as head of investments and corporate treasury.Rennie will be responsible for overseeing all aspects of investment management at Winterthur, including both portfolio management and the selection of external fund managers.

Death of David Norton

Former Institute of Financial Planning chairman and president David Norton has died, aged 54.


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