Annuities - Change is afoot

The two main factors affecting the pricing of conventional annuities are the investment return on corporate bonds and how long the client is expected to live, together with how much to charge for the guarantee. These are all influenced by changes in the market and by regulation. The implications of Solvency II are also already having an impact and this, combined with increased longevity, means it’s possible that guaranteed annuities will become more expensive to buy in the future. But by how much? Well, that’s a much more difficult question to answer. Solvency II is forthcoming Europe...