Brexit: Pensioners Face Huge Trouble After Brexit
Annuities have taken an immense hit after the Brexit vote after pension companies announced cuts to the pensions of new retirees.
Annuities provide retirees income for life bought at retirement using all or part of a person’s pension savings. However, due to today’s low interest rates, the returns have halved, forcing pension companies including Just Retirement and Retirement Advantage to cut their annuity rates. Just Retirement had announced a 2% cut.
Tom McPhail of financial advisers Hargreaves Lansdown said: “Gilt yields and annuity rates have been dropping steadily over the past year. The events of the past couple of days have given new momentum to that trend.
“For any investor planning to buy an annuity in the immediate future, it may make sense to do so sooner rather than later. Once you’ve obtained a quote from an annuity company the terms are usually guaranteed for between two and four weeks.”
Analysts believe that long-term fixed-rate deals would come in trend for retirements the next few days with lower prices due to gilt yields falling in rates.
With annuity rates falling down, there could be lower interest rates and mortgages. Retirees can take out their money and re-invest it on performing real-estate.