The Bank of England will meet to discuss interest rates tomorrow (Nov 4) with any potantial increase resulting in more attractive annuity rates.
If interest rates rise, annuity rates could rise further and make them more attractive to current retirees, Hargreaves Lansdown said. Pension savers could also be affected as rates for those transferring their pension may be lower as a result of an interest rate increase. Providers use government bonds to provide annuity income, the firm explained. "When interest rates are low, lots of investors pile into these bonds because the return on cash is so low, so the price of government bonds rises. Given that they produce a fixed income, the income as a proportion of the price falls, which is...
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