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20th March 2019
:: Blog | April 2009 (9 blogs) | A pensions conundrum: should you annuitise now?

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A pensions conundrum: should you annuitise now?
You must already be aware that the credit crunch has led to a reduction in annuity rates over the last few weeks and consequently lower pensions for those people that have had to annuitise. As if would-be retirees don’t have enough to cope with at the moment, they are landed with picking up the pieces left over by the previous lending strategy of failed bankers.
The government’s approach to the credit crisis was to introduce quantitative easing but this led to a reduction in gilt yields as it sought to auction off bonds – a move that failed to attract sufficient buyers. However, all is not bad news, apparently! According to Citywire’s report: ‘The 10-year gilt yield rose from 3.3% to 3.4% following the Budget and some economists are predicting a rise to 6% over the next couple of years.’
So, erstwhile commentators like Tom McPhail at Hargreaves Lansdown have softened their calls from earlier this year when, with the prospect of falling annuity rates, they were recommending clients consider annuitising sooner rather than later. Tom comments, ‘Gilt yields jumped in reaction to the Budget and although we have been predicting a long-term downward trend in annuity rates, today it is much harder to call,’. See:
Mike Jones, Ltd, April 27th 2009

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