Annuities at all time low!

bigfreddiel

Its been in the press for a while now - £100k buys about £5k/annum annuity.

In 1982 £100k bought about £15k.

But is this a like for like comparison? Average wage in 1982 was £8k/annum and some 40 years earlier it was £300/annum when someone retiring in 1982 would have started working - actually probably even earlier.

Would this average earner therefore have a pension pot of £100k in 1982 - I some how doubt it.

just a thought

fj

ManAtHome

Yeah, but Merv's all right - the more printy printy, the more inflation, the more his platinum-plated inex-linked pension is worth - if you were a time-serving incompetent what would you do?

Anyway, leaving the "I'm alright Jackster" aside - the lower-paid who've tried to improve their lot are being stuffed and will have less to spend for the next however many years - that must be really good for the economy eh?

sandsy

It is a like-for-like comparison because it's expressed as a rate. It could just as easily be expressed as 15p per £1 or 5p per £1. It's just a way of getting it across to the average person in the street.

The important bit is that 15p has dropped to 5p becasue of (a) falling interest rates and (b) increasing longevity.

Back in 1982, most people retired on final salary pensions and did not accumulate a pension pot in their own name in the same way as many do today.

bigfreddiel

sandsy wrote: »

Back in 1982, most people retired on final salary pensions and did not accumulate a pension pot in their own name in the same way as many do today.

if thats the case why does the press keep banging on about what a £100k pot could buy in 1982?

fj

jem16

bigfreddiel wrote: »

if thats the case why does the press keep banging on about what a £100k pot could buy in 1982?

fj

It wouldn't make such a good story otherwise.

Just_landed

bigfreddiel wrote: »

Its been in the press for a while now - £100k buys about £5k/annum annuity.

In 1982 £100k bought about £15k.

But is this a like for like comparison? Average wage in 1982 was £8k/annum and some 40 years earlier it was £300/annum when someone retiring in 1982 would have started working - actually probably even earlier.

Would this average earner therefore have a pension pot of £100k in 1982 - I some how doubt it.

just a thought

fj

When I took out a pension in the late 80s I was quoted about £15,000 a year annuity but over the years I have paid in twice as much as the initial monthly payments and the annuity at the moment would be just under £5000, so I'm not so sure your theory is quit right.

bigfreddiel

Just_landed wrote: »

When I took out a pension in the late 80s I was quoted about £15,000 a year annuity but over the years I have paid in twice as much as the initial monthly payments and the annuity at the moment would be just under £5000, so I'm not so sure your theory is quit right.

let me see if i understand this:

" I took out a pension in the late 80s" - Not early 80s then?

And by quoted you mean you started taking your pension at that time?

If you could clarify please.

fj