Have we reached peak annuity rates?

michaels

I don't think tax like council tax and income tax that are up by more than overall inflation are included in the inflation numbers so it is not surprising that those who have an income going up with inflation feel worse off in real terms.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/81987544#Comment_81987544

If not, perhaps they should be? If nothing else to obtain a more accurate measure of inflation so folk can plan properly. They are major components of most folks' spend.

kempiejon

If we're not at peak annuity and gilt yields are moving upwards that's increasingly interesting for my fixed interest allocation. I have a short ladder of a few conventional gilts maturing over a few years, most are available at a lower price today. I will be recycling a few maturities and if funds permit I might add to my holdings. I use gilts to fix an amount at a known date and an increased running yield as I add and recycle is handy.

But if rising rate are the corollary of inflation then fixed income becomes a risk.

Cobbler_tone

https://forums.moneysavingexpert.com/discussion/comment/81987519#Comment_81987519

The 4-4.5% increase is not only above inflation, it is compounding on recent previous years of high inflation. I'd also hazard a guess that Feb 26-27 is going to be higher than the above inflationary rises on groceries of 25-26.

The point some of the figures haven't fed through yet only means the numbers are currently going one way…again.

My point was more about the average family, maybe a couple of kids and a mortgage on £40k household income a year. They will be seeing a challenging difference across the past few years, with very little restbite. Maybe not so much those who have either retired on a healthy pension, or those working and debating whether to put £40-60k a year into their pension.

It is all individual and relative, depending on your overall picture. e.g. I couldn't care less if holidays abroad, the newest iphone or games console quadrupled in price but most of us see/feel a difference in the monthly bills.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81987553#Comment_81987553

It would be very difficult to get any kind of figure that reflected the reality even a minority of people. Especially with income tax. A significant % of adults are retired; unemployed; economically inactive or in very low paid/part time jobs and pay no or little income tax, or get tax credits.

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/81987589#Comment_81987589

….but one could make a reasonable estimate on the rise in income tax based upon the average wage. I realize retirees, unemployed etc are not included in average wage figures, but then if that were made clear in the inflation figures, then folk can at least be better informed, and decide whether such figures are optimistic/pessimistic for their particular lifestyles.

OldScientist

There is a personal inflation calculator underpinned by the ONS data at https://www.ons.gov.uk/visualisations/dvc1833/calculator/index.html

I've never felt sufficiently enthusiastic to go through entering all of our household expenditure, so cannot comment on how well it works.

Otherwise, the only way is to track your own monthly or annual expenditure by category (the ONS categories probably form a useful starting point). I'm aware of some people (on these and other boards) that indeed do actually do this.

ali_bear

Adding up annual expenditure wasn't difficult. The only thing I had to collect up over a period was supermarket receipts, split into alcohol/non-alcohol.

phlebas192

https://forums.moneysavingexpert.com/discussion/comment/81987544#Comment_81987544

Council tax is included in CPIH, but not CPI.

By definition, inflation measures the increase in the cost of things so it wouldn't make sense to include income tax. Disposable income is a better measure for the impact of IT changes but it varies so much by individual that you couldn't possibly come up with a single figure.

Bostonerimus1

I can't control things like council tax, unless I move which I don't want to do right now. However, I do monitor and control other costs. I try to spend the same at the supermarket and will forego expensive items if I see the weekly cost increasing. The same goes for heating and electricity etc. I will cut back consumption to keep my costs stable and thus keep my personal inflation rate under control. Also I don't have Netflix, Amazon, etc as increases in those subscriptions can really mount up without you realizing it.

So as I am controlling my personal inflation rate, and have index linked SP and DB pensions, I plan to take out a flat annuity so that I can get the higher payments when I am a bit younger.