A director of one of the U.K.'s larger annuity brokers suggests that inflation could result in poverty for many U.K. annuity owners.
In a piece titled "The Great Annuity Scandal," Steve Hunt expresses his concerns about annuity owners who are unaware of the risks they may face over the next several years:
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. And God forbid we get back to good old 1975 when it hit 24%. Mind you, 24% inflation would significantly help the government’s debt problem! Now there’s a thought.
Source: Reuters UK
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