I was asked this week whether annuities are now ‘a good investment’. They’ve been recommended very rarely in recent years, since ‘pension freedoms’ allowed pretty much unlimited drawdown on pension funds and anything left to be passed on to beneficiaries free of Inheritance Tax. The rate rises which have been dire news for the rest of the economy mean that the best index-linked annuities now give a return of just under 4%; and that you have to live for just 15, rather than the previous, average of 22 years to get your money’s worth if you give up your pension pot to buy one. In my view, most are still better off not giving up that pot; but if your horse fits that particular course and you want or need some certainty, the annuity is now an option. But still not a great one, in my humble.
“Why you should never retire”
On my 50th birthday, I will always remember, amongst the card or two I received was a letter from Saga’ who’d managed to find out my age through the wonder of the internet, and were pleased to tell me I now qualified to join my parents and go on holiday with them.
