Pension and Annuity rollercoaster

Pension Release savers have been urged to switch from the stock market to banks in consideration of annuity rates falling. With a massive FTSE 100 stock market rally of 50% the market has been restored to the same place it was a year ago and potentially may help pension funds soar. However, experts do warn that the risk of markets losing some ground is at the very least as great as a continued rise. Savers who continue investment in the stock market for the foreseeable future must be aware that any sudden loss may not be recovered, and that a falling fund will lead to a smaller income upon retirement. It is the case therefore, that if one were to remove pension money from the stock market as suggested they are provided with the two options of bank gains (cash savings) or an annuity. It is also of note that annuity rates have drifted sideways for much of the past half year, whilst insurers have slashed returns. The benchmark annuity rate for a 65 year old therefore has dropped to under 7% for the first time in two years. And the government's quantitative easing has many in fear that annuity rates will fall further in the coming months. Linked is the Bank of England in recent times buying up gilts (government bonds), forcing their price dramatically down thus lowering the income they pay. A 10-year gilt, which annuity is linked with has sunk 15% in the past few months alone. And with speculation increasing that the Bank of England will expand the £175 billion programme further, annuity rates are expected to plummet.