in purchases of retirement income product


Annuity rates have collapsed to all-time lows within weeks of pension freedom reforms which removed the need to buy the unpopular products to provide an income for life. The drastic cuts are being driven by a sharp drop in the yield from gilts - UK Government bonds that are used to produce annuity income - and reduced customer demand which makes providers charge more to compensate for the loss, according to comparison website Moneyfacts.co.uk. It found the average annual income from a standard single life annuity for a 65-year-old with a £10,000 pension pot, that does not rise with inflation, has fallen 5.9 per cent to £476 since the beginning of the year.
And the income the same person can get from a £50,000 pot has dropped by 6.4 per cent to £2,550. Someone with this annuity would have to wait almost 20 years just to get the original cash value of their pension pot back as income.....Read more here