Retirees are suffering due to rate cuts and the £75 billion quantitative easing programme from the Bank of England, it has been revealed.
Recent policy decisions from the Bank of England mean that pensioners will face reduced retirement incomes, it has been claimed.
Alexander Forbes Annuity Bureau has released new figures, showing that potential returns from annuity products fell sharply over the last month. The typical 60-year-old man was found to be able to take out a best-buy annuity worth £6,440 a year - £320 down on the month before.
Annuities are products taken out when converting a retirement savings pot into a retirement income. Fluctuations in the market are therefore very important to retirees - as most annuities fix their retirement income for life.
Alexander Forbes blamed recent policy decisions from the Bank of England for the downwards trend. In a bid to improve lending flows through banks, which have been damaged by the credit crisis, the institution has slashed interest rates to an all-time low of 0.5 percent and begun a programme of quantitative easing.
The latter policy - the modern-day equivalent of printing money - sees the Bank buy up a combination of corporate and government loans, pushing yields down and boosting the money supply. The £75 billion programme is scheduled to be wound up in the summer.
Tim Whiting, director at Alexander Forbes Annuity Bureau, said: "Annuity returns are directly linked to interest rates and government gilt yields - both of which have fallen significantly… It has never been more important for people retiring to shop around for the best annuity as the difference between the best and worse annuity could make hundreds of pounds difference to a person's annual income."
