UK - Annuities are unlikely to mirror interest rate rises, experts warn.They believe the historic link between annuity rates and long-term gilt yields has been broken by changes in longevity.
The Annuity Bureau’s managing director, Peter Quinton, said annuity rates had fallen by about 6% since the start of the year, even after interest rates had been taken into account.
Quinton said: “Annuity rates are affected by any increases in longevity and I am afraid this has over-ridden any immediate upside and is likely to continue to do so in the short-term.”
He added: “I would not advise anyone to delay purchasing their annuity in the hope of an annuity rate rise – the highs of the 1990s are extremely unlikely to ever return as longevity continues to surge and inflation remains under control.”
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