Annuities

Malthusian

The problem with waiting for annuity rates to go up is that you either have to remain in the market (which means your fund could go down and leave you worse off even with a higher annuity rate), or in cash (which means that with every month that passes you have lost an annuity payment).

Waiting more than a few months in the hope of higher annuity rates stops being waiting for existing yields rises to be priced in, and starts being crystal-ball-gazing about future yields. If it was guaranteed that gilt yields would rise in the future, they already would have.

Secret2ndAccount

najan49 said:

You are in favour of market timing?

If the central banks are telling you what they are going to do, and the annuity rates trail behind the gilt rates, is it market timing or just arbitrage?

Notepad_Phil

Secret2ndAccount said:

najan49 said:

You are in favour of market timing?

If the central banks are telling you what they are going to do, and the annuity rates trail behind the gilt rates, is it market timing or just arbitrage?

And if gilt rates suddenly fell...

westv

Notepad_Phil said:

Secret2ndAccount said:

najan49 said:

You are in favour of market timing?

If the central banks are telling you what they are going to do, and the annuity rates trail behind the gilt rates, is it market timing or just arbitrage?

And if gilt rates suddenly fell...

That would require the price of gilts to rise suddenly. 

Notepad_Phil

westv said:

Notepad_Phil said:

Secret2ndAccount said:

najan49 said:

You are in favour of market timing?

If the central banks are telling you what they are going to do, and the annuity rates trail behind the gilt rates, is it market timing or just arbitrage?

And if gilt rates suddenly fell...

That would require the price of gilts to rise suddenly. 

They would indeed - but given the typical response by the higher ups to any sudden shocks to the financial system over the last decade or so, can anyone guarantee that won't happen over a very short timescale if something new suddenly comes along.