The cost of delay.

 

For every year you delay, you’ll be missing out on the guaranteed annual income an annuity would provide.

Annuity rates are at a 6 year high, however, there is already evidence that annuity rates are falling, following interest rate and gilt yield falls.

Annuities offer a guaranteed income for life that most pension funds don’t.

To get a pension fund back on track within a year or two will depend on high investment returns.

We are in unprecedented times – no-one knows how long the stock market will take to recover.

 

The big question is what will give you the highest income?

• Buying an annuity now using the current value of your pension savings to benefit from a higher annuity rate based on today’s interest rates; or
• Waiting until your pension savings have had a chance to recover their value with the risk of a potentially lower annuity rate being in place when they have.

 

Obviously, we do not know what is going to happen over the year ahead and your pension savings may grow by more than 8%. By the same token, annuity rates could fall by more than 10%.

 

What’s important is to consider how you feel about leaving your pension funds exposed to investment risk in the year ahead. And, how confident you are that your pension savings will recover and grow in one year by enough to negate the impact of a possible fall in annuity rates.

 

Remember, if you have any medical conditions, a poor health history or you happen to smoke, you may qualify for an enhanced annuity which can give you up to 30%* more income than a standard annuity.

 

* Source – The Exchange

Information taken from MGM Advantage flyer – choosing the right time to buy an annuity 12/08.