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MyCompanyPension.co.uk - Helping members of occupational pension schemes to better understand their benefits.
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:: Blog | May 2009 (9 blogs) | Consumed by gilt: annuities benefit from Bank of England strategy
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Consumed by gilt: annuities benefit from Bank of England strategy
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An unexpected rise in gilt markets recently should be good news for anyone looking to purchase an annuity in the short term. Annuity rates initially dropped once the Bank of England announced the use of quantitative easing as a strategy to manage the UK out of the current banking crisis.
The problem we face with this mounting debt pile though is the ultimate effect it will have on inflation. Given that few people predicted the timing and size of the credit crunch, it remains difficult for trustees, advisers and prospective annuity purchasers to estimate what inflation will be over the next 5 or 10 years. And of course, inflation is a critical assumption used in many aspects of retirement planning.
Jeremy Warner, the Independent’s Business and City Editor rounds off his short article on the current gilt market with a warning: ‘I fear the punishment of markets is only just beginning.’ See:
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Mike Jones, MyCompanyPension.co.uk Ltd, May 8th 2009
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