23 April 2009
Workers who have a pot of money to buy their pension with will
receive less income every year because of a fresh slump in annuity
rates.
According to Aon Consulting's monthly Pension Tracker, which
keeps tabs on the value of 3.7 million British workers' funds, a
saver retiring now could expect a reduction in their pension income
of 4 per cent compared with a year ago.
Annuity rates, which determine how much annual income can be
generated, are based on gilt or bond yields. But the Bank of
England's efforts to pump billions of pounds of cash into the
economy by buying gilts, has pushed up prices and brought yields
down to 50-year lows.
A £100,000 pension fund would have purchased an annual annuity
of £7,535 in September 2007, improving to a high point of £7,962 in
July 2008 before falling to £7,209 at the end of last month.
