Personal pensions income hits high
Personal pensions income is at its highest for two and a half years after strong investment returns and improved rates on annuities, a magazine survey has indicated.
Investment Life & Pensions Moneyfacts attributed the 1.7 per cent income increase to better investment returns with pension fund values rising 13.83 per cent last year. This was the second year running of double digit gains, and returns also proved steady since the start of this year.
The survey said men who paid £100 per month into a personal pension over 20 years would have an average £41,964 if it matured in May. This can mean a £2,639 annual retirement income, said the magazine.
Annuity rates rose significantly with April's increase being the sixth consecutive monthly rise, the first time this has happened since August 2008. Annuities are used to turn pension pots into regular life-long incomes but rates have fallen steeply in recent years on the back of higher life expectancy and lower gilt yields.
Since the beginning of the year however, the average expected annual income for a 65-year-old man buying a standard annuity which does not rise with inflation has risen to £629 (up 3.6 per cent) for every £10,000 saved, compared with £607 per £10,000 last year. Women have seen a similar rise (3.7 per cent) which lifts their annual income to £589 a year for every £10,000 they have saved, up from last year's £568.
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