The Money's Worth of Annuities in the UK between 2006 and 2014
The Journal of the Economics of Ageing, 2016
Posted: 23 Nov 2016
Date Written: November 21, 2016
Improvements in life expectancy and the fall in interest rates have had a significant impact on annuity rates but not on their Money’s Worth (MW). Following the ban of gender-based price discrimination, MW has decreased for male annuitants and increased for female annuitants. This paper investigates the ‘value’ of annuities in the United Kingdom (UK) and examines how this has changed from January 2006 to June 2014 ‘the relevant period’. During the relevant period the MW of a standard annuity bought on the open market was, on average, 94% for a 65-year-old male annuitant with a £50,000 pension pot.
Keywords: Annuities; Insurance; Money’s Worth; Pension
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