Annuity rates ‘have gone into freefall’: Money-printing triggers slump - and it may g

purch

I think there is some confuzzilation between a Pension Fund and an Annuity.

Yes, a pension fund invested in GILTS will rise in value, as gilt prices rise whilst yield falls.

However, for those requiring to buy an Annuity, the return is locked in on purchase (no investment return), and at current yields they do not look particularly attractive.

So of course, someone close to retirement might have benefited over the last few years with a rise in fund value, but the Annuity they will be buying today with a paltry return, will be paying out (hopefully) for many more years, so the net return from the QE is likely to be negative for those particular investors.

wotsthat

homelessskilledworker wrote: »

http://www.dailymail.co.uk/news/article-2215301/Annuity-rates-gone-freefall--Money-printing-triggers-slump--worse.html#comments


I am still of the opinion that the BOE will continue to pander to the heavily indebted homeowner for the foreseeable future, but this is quite an injustice and I can see a lot of grey p****d off voters becoming more vocal in the next few years.

The article says nothing about the 'heavily indebted homeowner' nor the BoE policy towards such people.

chewmylegoff

Gracchus_Babeuf wrote: »

I was referring to people, not households. Anyway, whatever the exact number, it's a very large number of people. Most who are mortgage free are either the retired or the wealthy - why should their interests be put first when there are millions of ordinary people struggling to get a decent life for themselves and their families?

the maths is easy.

there are 11 million mortgages.

there are 2.4 people per household.

there are therefore 26.4 million people living in mortgaged properties, out of a population of 65 million (so 40%).

michaels

purch wrote: »

I think there is some confuzzilation between a Pension Fund and an Annuity.

Yes, a pension fund invested in GILTS will rise in value, as gilt prices rise whilst yield falls.

However, for those requiring to buy an Annuity, the return is locked in on purchase (no investment return), and at current yields they do not look particularly attractive.

So of course, someone close to retirement might have benefited over the last few years with a rise in fund value, but the Annuity they will be buying today with a paltry return, will be paying out (hopefully) for many more years, so the net return from the QE is likely to be negative for those particular investors.

I think the impact if the pension fund is 100% in guilts will be close to zero. One could also argue the QE has helped other asset classes such as equities and property equally. However if your fund had been in cash for the last few years then you would definitely have lost out.

ILW

michaels wrote: »

I think the impact if the pension fund is 100% in guilts will be close to zero. One could also argue the QE has helped other asset classes such as equities and property equally. However if your fund had been in cash for the last few years then you would definitely have lost out.

Aren,t most pension funds geared towards cash in the later years?

wymondham

This is all indeed a worry. I've recently started putting quite heavily into my pension ..... is this all in vain??

ILW

wymondham wrote: »

This is all indeed a worry. I've recently started putting quite heavily into my pension ..... is this all in vain??

Probably....

The BoE dislike anyone who tries to save for their future.

Batchy

about 70% of the houses are owner occupied in this country I believe...

ILW

Batchy wrote: »

about 70% of the houses are owner occupied in this country I believe...

And your point is?

C_Mababejive

Batchy wrote: »

about 70% of the houses are owner occupied in this country I believe...

Dont you mean bank owned?