NEWS   |    February 13, 2024

Anna Rogers comments in the Financial Times on the suitability of annuities when planning for retirement

Driven by rising interest rates and the returns available on gilts, pension annuity rates have leapt forward over the past two years, leading to a surge in demand.

However, there is little consensus among advisers as to whether rates will trend upwards or downwards, and thus it has become a difficult decision for pension planners to navigate.

Senior partner Anna Rogers commented:

“To annuitise or not is a difficult financial decision and it’s not just a bet on future economic conditions. My personal approach is that the first rule of investment is diversification, so it’s worth considering splitting one’s pension pot between annuity now and annuity later, and also between inflation-linked and flat rate.

“Another difficult question is single life or joint life. That could be seen as a bet not just on health and life expectancy but also marriage duration risk!

“People want an income for life. But they also want their savings to be inheritable There’s undoubtedly an advice gap when it comes to decumulation decisions and the independent financial advice process is costly. The direction of travel is to put more obligations on occupational pension schemes to smooth the path with default options, but clearly then there is a risk for trustees and sponsors.”

Read Anna’s comments in The Financial Times, here.

The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.

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