Those who have either retired, or about to retire, are one of a number of segments that have been negatively impacted by the governments decision to pump £75 billion into the economy in the form of quantitative easing. Many who fall into this grouping have, through the years, meticulously invested into a pension for their retirement. Although the amount they have put away is important, it is equally important to get a good pension annuity i.e. the regular income generated from the pension pot upon retirement.

However, due to the current economic environment many pensions will have lost a significant amount of value and so have annuity rates. To make matters worse the government’s quantitative easing programme is structured to buy back its own gilts and as a consequence caused a steep drop in gilt yields. Since these are the very instruments insurance companies base their annuity rates on, they have effectively taken a double hit.

According to some commentators annuity rates have fallen by a dramatic 13% in 8 months. For example, a male aged 65 with an average pension pot of £100,000 is expected to receive £1,000 less per annum today than 8 months ago. Hargreaves Landsdown suggests that this situation is likely to continue for some time so it is even more vital to shop around to ensure you get the best rate possible.

It is important to appreciate that there is a wide variation of up to 30% between the best and worst annuity rates and a huge choice in the type of annuity on offer. Taking the advice from a professional could certainly be a step in the right direction to ensure that you get an annuity to match your individual circumstances.