The concept of an annuity has not changed in hundreds of years. In fact the first annuities sold were probably during Roman times where ‘annua' were sold for a fixed period or for life; but today's mortality is unprecedented in history. An annuity was never designed to be paid over 30 years, or even 20 years for that matter.
What concerns me a great deal is the number of people who are going to be living in poverty in 10 years' time because they have bought an annuity. Or the number of widows forced into poverty because their husband had bought a single life annuity. Let me explain why. Inflation may not be a problem now, and who knows when it will return, but return it will - that is a given. The vast majority of annuity sales are level (and a great many single life). At just 3% inflation an annuity paying £500 a month in 10 years will reduce to £370 a month and at 5% inflation to just over £300 a month....
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