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P204 CEEFAX 204 Sat 19 Nov 15:01/56   1/5  ANNUITY UPDATE    Last week we saw two insurance companies, Sun Life and Stalwart, reduce their annuity rates. But our benchmark annuity rate has not changed, reflecting the relative stability in the market. However, we think annuity rates may change soon after the Budget, depending on how the financial markets react to the speech. One way of increasing your pension is to consider a with-profit annuity. Index Linked Annuity Rates 276 Mortgage and Savings Guide 260 Arrivals Feature Mst Panel Annuities
P204 CEEFAX 204 Sat 19 Nov 15:01/30   2/5  ANNUITY UPDATE    A conventional annuity is a non profit policy - not linked to the performance of an investment fund. The main drawback is that the rate is set at the outset and will stay the same through the annuities life Escalating annuities increase by a fixed percentage and index-linked ones rise each year by the current rate of inflation, but they are still non-profit annuities. The fixing of the rate at outset is especially galling if annuities are low to start with.  Index Linked Annuity Rates 276 Arrivals Feature Mst Panel Annuities
P204 CEEFAX 204 Sat 19 Nov 15:01/44   3/5  ANNUITY UPDATE    With-profits annuities provide a similar income to fixed annuities but payments will rise if future bonuses are held at current levels. Your pension fund will have been invested in equity linked funds, so why not enjoy the benefits of a with-profit investment when your pension is being paid. The initial income is determined not by current interest rates but by anticipating future bonus levels At the end of each year the anticipated bonus is added and the actual bonus added to give the actual annuity.  Arrivals Feature Mst Panel Annuities
P204 CEEFAX 204 Sat 19 Nov 15:02/10   4/5  ANNUITY UPDATE    The table gives an example of a with-profit annuity with a conventional 3% and 5% escalating annuity and shows the increases at five year intervals. AGE 60 65 70 75 80 3% £ 863 1009 1169 1355 1571 5% £ 728 933 1191 1520 1940 WP # Low £ 806 972 1164 1416 1704 WP * Low £ 806 1104 1536 2124 2940 # Assumes actual growth 9% a year * Assumes actual growth 12% a year  Arrivals Feature Mst Panel Annuities
P204 CEEFAX 204 Sat 19 Nov 15:02/42   5/5  ANNUITY UPDATE    You should always remember to take care when comparing different rates With-profit ones are based on future assumptions about investment returns and the value of these can fall as well as rise. With-profit annuities do provide good value, especially if you think annuity rates are low. They are especially suitable for small funds and can provide a hedge against inflation. But be warned - there is a risk that the annuity may fall if future bonuses are lower-than-anticipated.  Arrivals Feature Mst Panel Annuities