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Post Code Annuities

Few are in agreement to a recent study that wants to use postcodes not just age and gender to assess the average length of like for annuities. It considers where people live has a lot to do with their life expectancy.



The poorer areas would get a better rate, those in wealthier areas would get less. The rate difference could be between 15% and 20%. It was pointed out that those living in poor areas probably would not be able to afford to buy annuity.

It seems that this is a trend that is likely to be put into practice.

Life expectancy increases 'adding billions to pension liabilities'

Increasing life expectancy for Britons is costing the UK private sector £15 billion in pension liabilities for every extra year of life, new figures indicate.

According to finance company KPMG, UK private sector companies have added around £30 billion to their pension liabilities over the last two years due to increases in life expectancy for pension scheme members.

The life expectancy of the average UK pension scheme member assumed by companies at the end of 2006 is around one year higher than at the end of 2005 and two years higher than at the end of 2004, the study shows.

FTSE 100 companies have borne most of the cost, with around £25 billion added to their balance sheets over 2005 and 2006.

Alastair McLeish, head of KPMG's Pensions practice, explained that when increasing life expectancy and falling market returns started putting a strain on companies' finances, many closed their defined benefit schemes.

"But this is not always the best solution," he commented. "Defined benefit schemes, whether they are based on final salary or career-average earnings, are highly valued by employees as part of an overall benefit package."

New research from Abbey Savings indicates that nearly two-thirds of Britons aged between 45 and 54 have not yet set down a retirement plan.

Insurances Limited “Savings are becoming very diverse in nature, anything from paintings to buy to let are forming part of pension provisions. Pension plans will still remain popular due to their tax efficient attributes.”

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