Pension’s annuity meltdown drops 27%

Pension’s annuity meltdown drops 27%

The Bank of England’s quantitative easing policy has worn down pensioners’ earnings and left new retirees thousands of pounds even worse off, experts have warned today.

With the Bank’s policymakers electing one more £50billion of asset-purchases this week, Tom McPhail, head of pensions analysis at Hargreaves Lansdown stockbrokers, warned that QE has sent the UK’s pension annuity prices into ‘meltdown’ for the previous four years.

Figures show that if someone had £100,000 in July 2008 they would have been able to secure an earnings of £7,855 per annum — whereas today, if you hit your pension age, the annuity would only have the ability to secure an income of £5,743– a drop of 27 per cent.

Money-printing has actually drastically decreased the yield on government bonds– known as gilts– to which annuity prices are linked, requiring those who are newly retired to buy an annuity which will pay considerably less than it would certainly have done previously.

The Bank’s monetary policy committee, as was extensively anticipated, improved its QE program by a more # 50billion today. Some economists had actually expected it to be £75billion.


Are you affected? - get your free, no obligation Pension Review.