Pensioners suffer again from money printing programme

Tim Wallace
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ANNUITY rates have plunged 29 per cent since the introduction of quantitative easing in 2009, Axa Life Europe reported yesterday.

A pension pot of £100,000 would have bought an annual income of £5,040 in the second quarter of 2009, the finance group said.

But the same amount of savings would bring in an income of just £3,580, down £1,460 in four years.

“When you look at the timing of the Bank of England’s programme and look at the annuity rates over that time, there is a clear trend of decreasing rates,” said Axa’s Simon Smallcombe. “Many people will face difficult decisions and may have to choose between delaying retirement to bridge the income shortfall or converting their pension pot before annuity rates fall further.”

Bank of England governor Sir Mervyn King has expressed sympathy for those who live off their savings, but insists monetary policy must be set with the inflation target alone in mind.