Annuity purchase: Timing is key

The gilt yield in December 2011 was at its lowest ever level. The rounded down figure used to calculate maximum drawdown income using Government Actuary's Department tables is just 2.5%, and having only calculated rates for yields below 5% in 2006, the Government Actuary could be looking at a further calculation soon, as their minimum rate assumes gilt yields of 2%. So, why would anyone want to buy an annuity now? It is important to understand what an annuity does to answer that question. An annuity insures the policyholder against outliving his or her income. Henry Allingham, who die...