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Pensioners risk GBP5,000 income in stock market panic, says Key

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Pensioners panicking over stock market volatility are risking up to GBP5,000 income by delaying taking out an annuity in the hope of seeing their pension fund recover, leading independent equity release adviser and pension annuity broker Key Retirement Solutions warns.

The FTSE-100 has slumped 12% in the past two months sparking panic among people about to retire about the potential effect on their pension funds with Key Retirement seeing a surge in calls about delaying buying an annuity.
 
But annuity rates have also fallen around 3% over the same period with an average GBP100,000 fund now generating GBP6,624 a year compared with GBP6,831 – an annual loss of GBP207 which adds up to GBP5,000 over 25 years.
 
Analysts are predicting annuity rates could continue to fall having hit an all-time low after a 20% drop in the past three years further adding to the cost of delay. Another 3% fall in the next three months would cost pensioners GBP200 a year.
 
In reality the vast majority of pensioners coming up to retirement will have had their funds switched to safe investments which will not be affected by stock market volatility – and delaying buying an annuity will cost them income without boosting their fund.

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