Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • January 2013
01

Average annuity payout 'has fallen over £14,000 since 2010'

Open-access content Tuesday 22nd January 2013 — updated 5.13pm, Wednesday 29th April 2020

The total retirement income from an annuity purchased using a £50,000 pension pot has fallen by £14,180 since January 2010, according to figures published by MGM Advantage yesterday.

2

Three years ago, the average annuity for a 65-year old with £50,000 saved in a pension would have paid an annual income of £3,495.

But the consultancy's latest Annuity index shows that the same pension pot today would generate an annual income of £2,786 - 20% less and, over the average retirement of 20 years, a £14,180 reduction.

MGM Advantage's figures indicate that average annuity rates fell by 2.5% in the last quarter of 2012 alone - the seventh consecutive quarter they have dropped. Last year saw the average annual income for a 65-year-old man buying a standard annuity fall by 11.7%.

Aston Goodey, distribution and marketing director at MGM Advantage said the fall in annuity rates over the past year was down to factors including historic low returns on government gilts and the introduction of gender neutral insurance pricing.

'Improving longevity and Solvency II will continue to apply pressure on rates, and we expect a further period of uncertainly as the dust settles on the introduction of gender neutral prices,' he added.

MGM Advantage noted that there were still options for retirees which could increase their income when they stop working. These include alternatives such as investment-linked annuities, which tie retirement income into the value of investments like stocks and shares.

'Other options include enhanced annuities, which take health and lifestyle into account, and can increase the annuity income by as much as 30% or more,' Goodey added.

This article appeared in our January 2013 issue of The Actuary.
Click here to view this issue
Filed in:
01
Topics:
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2022 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ