According to Britain’s AnnuityRates.org, “Annuity rates (are) set to fall for 5 years, say IFA’s.” The author states that 80% of the British advisers questioned believe that fixed annuity rates as well as other annuity rates will fall for five more years. The study was performed by MGM Advantage at the recent Retirement Summit. A quarter of the advisers think rates will fall by 7.5 to 10%, while a fifth of them think they’ll fall by more than 10%.
An interesting outcome from the interviews is that nearly all of the advisers questioned think that asset-backed, or indexed annuity products, will grow significantly over the next five years. They think that people will be more open to taking bigger risks by investing in the markets in order to increase their annuity income. With low interest rates, many investors are concerned that they will not be able to maintain their standard of living in retirement with conventional annuity products.
MGM Advantage says that rates in Britain continue to fall because of Solvency II and the increasing life expectancy of investors. Their Flexible Income Annuity balances the need for a minimum level of income with both the risk of inflation and an option for increased growth. It is a death benefit annuity with a minimum income guarantee rider. Investors in Britain need to do the same thing as investors in America, shop around for the best fixed annuity rates and rates that will carry their savings through retirement.