Quantitative easing and annuity rates

Commenting on the impact of quantitative easing on the annuities market, Craig Fazzini-Jones - Director and Head of MGM Advantage Designs for Retirement said: "The Bank of England's announcement of £250bn quantitative easing to UK capital markets has caused a sharp fall in the government bond yields which will impact on annuity rates.

Typical annuity rates have been around the 7% level for a 65 year old male, and these will start to fall. But the fact remains that annuity rates will still be much higher than savings rates. We also expect annuity rates to compare well against investment returns for some time yet.

This means that annuities remain a good, solid option for many people considering retirement this year. That's because once an annuity is purchased the rate is fixed, regardless of what happens with asset prices or interest rates. Annuity rates are also guaranteed for life, offering tremendous peace of mind in an economic downturn.

Consumers at retirement can improve on typical annuity rates simply by shopping around. And with good financial advice they can probably get an even better rate because of their individual circumstances, such as lifestyle or health conditions."