Annuity squeeze pushes income for those retiring without final salary pension to all-time low

Individuals who are approaching retirement having invested in money purchase pensions are experiencing all-time low rates of return on their investments.  In comparison to retirees on final salary schemes the gap is significant.

One year ago a man retiring with a pension pot of £100,000 could expect to receive a £6,120 salary for life.  Today the value of this pot is £5,720 - a fall of £400 in one year.  20 years ago this same money purchase scheme would have been worth £14,000 a year.

The value of annuities, or money purchase pensions is determined on the date that the individual starts to draw from their pension pot.  At that point payment from investment or insurance companies is fixed for the rest of the pensioner's life.

Individual's working in the private sector are managing to escape this situation as their pension schemes are based on a percentage of final salary or their career average salary.

Homeowners aged over 55 years who are would like to carry out some home improvements or perhaps enjoy an exotic holiday and would like to know how much money the value of their property could release to provide a cash lump sum or increase their income, can find out by contacting therightequityrelease.co.uk for equity release advice.