Annuity rates fall to new low during the pandemic
Payouts could fall even further as Bank of England looks at negative interest rates, experts say
26 January 2021 • 6:00am
Annuity rates hit record lows in 2020 continuing a trend of deterioration that has seen the guaranteed source of income lose value in five out of the past six years.
Rates fell 6.4pc in the 12 months since January 2020, according to Moneyfacts, an analyst. This meant the average basic “single-life” annuity for someone aged 65 now only pays £4,590 a year from a £100,000 pot. This is down from £4,824 in 2019 and £5,250 two years prior, according to Hargreaves Lansdown, a stock broker.
How to get a £300k pension that costs just £27k
The maximum you can save into a junior self-invested personal pension for a child is £3,600 this tax year
13 January 2021 • 6:00am
It doesn t take a financial genius to work out that the earlier you start saving, the bigger your pension is likely to grow. But new analysis has shown how the length of time you invest is as important as the size of the contributions you make.
Saving into a child’s pension for the first 18 years of their life could lead to a pot of close to £300,000 by the time they hit retirement age at 67, according to Canada Life. If you were to set aside £1,500 from birth to their 17th birthday, the £27,000 of combined contributions could grow to £284,000 by the time they reach state pension age in their late sixties. Investment returns are assumed to be 4pc a year, after fees.