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Retirement

Advisers worried about ‘locking’ clients into low rate annuity rates ahead of market recovery

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Advisers are increasingly concerned about locking clients into currently low conventional annuity rates, but nearly three in five (58 per cent) are predicting improved rates in the next five years, according to new research from Primetime Retirement.



Primetime Retirement’s research among 447 retirement specialist IFAs shows nearly 82 per cent of advisers are worried about clients locking-in to low lifetime annuity rates and are looking for alternatives while another five per cent are concerned but don’t believe there are other options.

The immediate future looks bleak – four in five (79 per cent) do not believe that conventional annuity rates will rise over the next year but this drops to less than a quarter (24 per cent) when looking at the next five years.

The research by Primetime Retirement also shows that 91 per cent of IFAs believe that the Bank of England base rate will rise over the next five years and thus signalling a rise in annuity rates.

Primetime Retirement chief executive Kim Lerche-Thomsen says: “We are currently seeing low annuity rates which are causing IFAs to search out alternative annuities but it is encouraging to see that over the next five years, rates should improve.

“Today we see flexibility in all other financial services sectors, so why not for retirement income products? Despite people living much longer, a person’s health and family circumstances are unpredictable. Fixed term annuities allow those in retirement to determine which type of annuity suits them best in individual five to six year stages throughout the latter part of their life.”

Previous research conducted by Primetime Retirement research showed how more than three quarters (77 per cent) of specialist retirement income advisers expect the fixed term annuity market to grow in the next two years.

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