It pays to take a risk in retirement

Source: The Sunday Times

With rates so poor, experts advise looking for alternatives at retirement.

Few people would think about fixing their mortgages for two decades, but most of us still lock our retirement income into a fix for 20-plus years — even though the rates available offer appalling value for money.

Pension experts say it is now time for a radical rethink of how we fund retirement.

Annuity rates have been creeping up, rising 6% over the past three months and 12% since the start of the year. They are now at their highest level since 2011.

However, the payouts remain extremely poor. Someone retiring at 65 with a £100,000 pension fund can secure an income of just £6,252 a year, according to Hargreaves Lansdown, with some annuity providers paying far less. This will not increase with inflation, nor will it pay a pension to any surviving spouse.

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Government asked to inflation link overseas pensions

Source: Every Investor

MGM Advantage has called on the government to review the policy denying thousands of people inflation-linked rises in their state pension when they choose to retire abroad.

Where a country does not have a reciprocal agreement with the UK, including some of the most popular retirement hotspots, UK pensions are frozen at the point of retirement. 

Australia, Canada, New Zealand and South Africa all currently fall outside the reciprocal arrangements with the UK but are popular with expats.

“Retiring abroad is an aspiration for many people, with our research showing three of the most popular foreign retirement destinations do not currently have reciprocal agreements in place,” said Andrew Tully, pensions technical director at MGM Advantage.

“We need to ensure a level playing field for anyone retiring abroad, irrespective of their chosen destination. People who have been caught out by finding their UK state pension frozen at the point of retirement understandably feel hard done by.

“For example, if you retired to Canada ten years ago, your UK state pension would now be worth 42% less than if you had retired across the border in the US. Many retirees have found this has hit them hard.”

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Annuity rates recover to two-year high in Q3

Pension payout rates have soared to a two-year high – bringing a welcome boost to millions of workers planning for retirement.

Figures yesterday revealed that people buying an annuity now will get 11 per cent more than this time last year.

Pensions have been squeezed by falling investments, a record low base rate of 0.5 per cent and the Bank of England’s money printing ­programme, which has pushed down the price of Government bonds and damaged annuity rates.

In November 1991 average rates were over 14 per cent. Today they are around 5.8 per cent.

The MGM Advantage Annuity Index showed rates increasing by six per cent in the third-quarter of the year, the largest quarterly increase since August 2009.

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Gender equality rules means women can get 12 per cent more retirement income from annuities than last year

By Adam Uren, The Mail Online

Women buying an annuity can get a retirement income 12 per cent higher now than before 'gender neutral' pricing was introduced just under a year ago.

Annuity rates have been on the rise since the turn of the year as a result of improved investment returns on the bonds and gilts that underpin them, but it is women who have benefited most thanks to EU rules introduced last December.

These gender equality rules meant insurance companies are not allowed to discriminate because of sex when offering to convert pensions into annuity incomes.

But once the EU rules were brought in this could no longer be taken into account, meaning women's rates rose and men's fell as the prices equalised.

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