Copy article

Annuities back in fashion

ended 17. December 2023

As annuity rates have increased, more people are apparently accessing their pensions this way. What should pensioners consider when making their decision at retirement? What are the benefits of annuities and the potential negatives? What will happen to demand if interest rates start to drop next year in order to boost the flagging economy?

1 responses from the Newspage community

Copy all

Copy

Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Annuities are going through a purple patch, but that might be about to end. Rates have just decreased, and are set to continue with that trend as the Bank of England starts slashing rates in 2024. Although locking in a decent rate will have been right for many clients this year, there are some disadvantages with annuities. If you want extras like a spouses benefit or indexation on your plan the starting rate is reduced. Unlike drawdown there are limitation on inheritability with an annuity and there is little flexibility to vary your income. There has been innovation in the sector though, and some providers do offer a hybrid annuity/drawdown plan now that could suit a lot of clients.