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

See all articles by Matteo Aquilina

Matteo Aquilina

Financial Conduct Authority

Robert Baker

Financial Conduct Authority

Tommaso Majer

Financial Conduct Authority

Date Written: November 21, 2016

Abstract

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

Suggested Citation

Aquilina, Matteo and Baker, Robert and Majer, Tommaso, The Money's Worth of Annuities in the UK between 2006 and 2014 (November 21, 2016). The Journal of the Economics of Ageing, 2016. Available at SSRN: https://ssrn.com/abstract=2873566

Matteo Aquilina

Financial Conduct Authority ( email )

25 The North Colonnade
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United Kingdom

Robert Baker

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

Tommaso Majer (Contact Author)

Financial Conduct Authority ( email )

25 The North Colonnade
Canary Wharf
London, E14 5HS
United Kingdom

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