New ABI tool provides snapshot of best and worst annuity rates

Hi Meldrew, some good points. I also lived throught the inflation of the 70s and saw my Grandparents income decimated. Although my parents who had just bought a new house saw their debt inflated away. Just a couple of things. Inflation linked annuities r currently priced I believe to allow for over 5% annual inflation. That is, the starting point is lower and for you to break even with 'average everything', inflation would have to be over 5% - government now seem to make this a very rare ocurrence. So it seems they are not good value The fixed term anuities seem a better bet as they allow you to 're-annuitiese' in 10 or so years time when rates should be better. Personally, at the moment I would go for income drawdown, where you keep the cash, and I could certainy earn a lot more than an annuity. Take you point about the footsie companies changing, but the big ones have been their for 25 years - all the ones I listed. However, a unit trust is not set in stone they can also buy and sell - indeed they should be swopping out shares that have become low yielders for high yielders. I picked this unit trust because it is in big safe companiey and managed for me. It is all the pension companies do, and take a massive fee for doing so. One of my irks, as you may have gathered, is that governements don't trust us so they have made pension provision complicated and policed, so only big companies can make most money from it I should say I am an active share trader, and hardly ever invest in footsie companies anymore as Elephants dont gallop. The 250 and AIM shares give you far better returns, though not necessarily dividends. The footsie as you say has yet to hit its 1999 peak whilst the 250 hit a new peak in 2004 and has regularly done so since.

To cover two posts in one reply - the annuity is safe - but your life expectancy isn't guaranteed. If you have a limited life expectancy when you take the annuity then you can get an enhanced pension . You can also take out term insurance to ensure that if you die early then your loved ones still get some dosh. But its because of all the variables that you can't have up to date easy to source annuity rates to cover every situation. You can get single life, joint life, level, increasing 5%, increasing RPI, limited guarantee annuities and these options can be permed together to create lots of variables. Then there's your age, health, where you live, what job you used to have and so on. So its not easy to produce meaningful live rates, just an indication. Its a bit like insurance comparison sites in that some factors can be incorporated in the comparison - but not all. When you go to the proper site more options open up for you before you make the final choice. Annuities are much the same but more important because the sums involved are larger and you make a once and for always choice - not like insuring a car where you can change your mind after a year. A share portfolio might be safe, it might not. It probably will do better than an annuity most of the time but there will be times when it will not. Check back 10, 20 years for the constituents of the FTSE100 and compare it with today - it'll look a lot different. So the blue chips then aren't the blue chips of today, and look at the banking sector! But if you are looking for an annuity do your research and take a few weeks to make the decision. Hedge your bets if you can. Almost certainly in 30 years time hindsight will tell you you got the decision wrong in some way, so you have to live with that. But most of us, having lived through the 1970's and the inflation then that decimated the incomes of those on fixed incomes then, would want to have the reassurance of an RPI linked annuity, if we could afford the low initial rate of income.

sorry meldrew you fell for the con - Annuties Safe? - if you die in a year you have given them your money - nice gift if you can get it. Ever heard of a poor pension company? Why are most of these companies in the footsie - because they make loads of money from you. Annuities are set and to be fair the government has set some lousy rules about how they must be covered. if you are unlucky enough to retire now you will a very low annuity but 10 years ago you got twice as much, and in 10 years time I am betting you will get much more. You have been locked in to a low rate for the rest of your life. You might have £90 a month for the next 30 years, eaten away by inflation, but I will not I will get £105,£108, £111,£115 - more each year and definetly ahead of inflation by investing in the likes of BT, BP, Astrazeneca, Glax, Standard life, Aviva, etc. this mix of companies isn't safe? It is just like investing money in shares vs savings etc. I have been told I am a risk taker for investing in shares - No the people taking risks are those who put it in savings. In 10 years time my money will almost certainly buy more than it does today. Those people who relied on savings will be able to buy 20% less, thanks to inflation. The only problem with shares is the sums involved and the need to be able to commit over time - say 10 years.