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PPI: Annuity rates predicted to fall by 2015

Annuity rates will fall over the next five years, according to new research.

Life insurance firm MGM Advantage has revealed that 82 per cent of independent financial advisors who were surveyed as part of the study expected rates to drop by 2015.

A quarter of respondents predict that rates will decrease by between 7.5 and 10 per cent, while 18 per cent thought rates would drop by 10 per cent over the period.

Aston Goodey, sales and marketing director at MGM Advantage, said: "There is a lot of pressure on annuity rates at the moment, including increased life expectancy and Solvency II, which will require insurers to keep back more capital.

"If rates do fall, conventional annuities will become less attractive and a greater focus will be placed on asset backed annuities."

An annuity, which offers pensioners a constant income in return for an initial lump sum or staggered payments, is compulsory for UK residents aged over-75.

Posted by Charles Baker

Charles is a reputed financial analyst with almost decades of experience under his belt ADNFCR-2776-ID-800059431-ADNFCR

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