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There is clearly a national state of emergency, but there is also a financial emergency for those approaching retirement with a money purchase pension and the over 70’s who are at high risk of suffering the worst effects of Covid 19.

As the well-known pension commentator Henry Tapper wrote: “pensions are about people’s lives and older people are living in particular fear right now". Justin Cash, editor of Money Marketing, tweeted; "We have all been caught with our pants down: @BillyBurrows on lessons for IFAs from the #coronacrisis”.

It is not just equity prices which have fallen as a result of the financial fallout of the global coronavirus epidemic, annuity rates have crashed as well. As a result annuity rates have fallen by 7% since the beginning of the year.

Falling gilt yields

Annuity rates are priced with reference to the yields on long term fixed interest investments such as gilts and corporate bonds.

The benchmark gilt yield (15 year gilt as quoted in the FT) has fallen through the floor. At the beginning of 2020 the benchmark gilt yield was just over 1% but recently it fell to 0.4% which is the lowest level since I started recording yields 20 years ago.

Gilt yields have fallen as direct result of the flight to quality as investors sell equities and buy secure gilts. As more people buy gilts the price rises but the yield falls.

Retirement advice is important, but many people with workplace pensions may not be getting the advice they need.

In this blog I explain why I think why advice should be more widely available.

I was asked three really good questions last week.

  • What are your thoughts of the effect of the Coronavirus on the global markets ?
  • Do I have to take my tax-free cash in one go?
  • How safe is my pension

Looking ahead at what may happen in pension industry in 2020 I see very few things that will have an immediate impact on advisers or their clients but I do see some policies and initiatives which will result in important changes in the future.

In the December 2010 Queen's Speech, the Government reintroduced pension schemes bill and it mentioned the creation of a legislative framework to allow people to access information for most pension schemes in one place for the first time. Therefore, it seems the Pension Dashboard has become one step nearer but are we are still left waiting to know when and how.

Here are my top tips for 2020 The beginning of a new year is a good time to take stock of your personal finances and to make sure your pensions are in good shape. Be serious about retirement planning and your income needs – there is a lot at stake Follow the Golden Rules of annuities Don’t forget the Golden Rules of drawdown Avoid paying too much tax on lump sums ...

I once had a client who said: “Give me a one-handed adviser”. He went on to explain that I kept on saying ‘on the one hand this and other hand that’, but he just wanted the answer.

I understood his frustration but as soon as I explained there was not one right answer and it was important to consider both sides of the argument he was happy with my two-handed approach.

I am hesitant to predict the 2020 trend for annuities as I have got it wrong in the past. I did predict 2017 would be the year of the annuity but I was clearly wrong about that.

However, there are good reasons to think that 2020 will be a better year of annuities as the Brexit uncertainty fades away. Therefore, providing the UK’s finances don’t end up in a mess I predict a slow increase in annuity rates and more retired investors converting their pension pots into income by purchasing annuities.

A balanced view of annuities and drawdown What is this all about? – Explaining the difference between annuities and drawdown. Why is it important? – converting your pension pot into cash and income is important and you should analyse all the options, not just the one you like at first sight. What is the point? – A financial adviser will give you a balanced view but i ...

Many people think they don’t need advice and end up making their own decisions without my help.

Why should I worry about this? After all grown-ups have the freedom to make their own financial decisions and make their own mistakes.

I worry because many people may be sleep walking into a danger zone where they may suffer a financial shock which will leave them seriously short of money in retirement.

William Burrows

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This website is run by William Burrows and publishes generic information on annuities, drawdown and other related retirement income matters. Any information you use is at your own risk and does not constitute financial advice.

If you require financial advice you will be advised by Better Retirement where William Burrows is authorised to give investment advice. Better Retirement Group Ltd is authorised and regulated by the Financial Conduct Authority, reference number 153420.