Monthly Archives: March 2011

Not too long ago Japan was hit with a big earthquake and a Tsunami. The Middle East is fighting for democracy. So how does this affect the annuity rates? Well, at the beginning of the year things were looking hopeful that the annuity rates would rise because everything was going very smoothly. It was not until the event in Japan happened that everyone noticed a change in the annuity rates.

Because of the events in Japan and the Middle East, annuity rates have fallen some from the beginning of the year. 15 year gilt yields were at 3.8% at the first of the year. They rose slightly to 4.3%. Since the events have taken place, the yields have fallen to 3.93% since this month.

Now that Japan is on the mend, many are hoping that the rates will once again rise and continue rising. It is amazing to see how an event such as this can make a change in something like annuity rates.

People look to annuities because it is income they know they will get for their retirement. When people are cut short on retirement funds, it hurts them in the long run because it makes it harder for them to be able to survive financially

Insurance companies have raised their revenue in the past year or two. L&G is no exception as the company increased its yields suggesting that employees can save their money and make it work well for them.

Market experts were unexpectedly surprised as the company claimed that its share price would increase to 4.75 per cent. The company was projected to decrease its profits in 2010. The result was that the insurer made 1 billion pounds during the year.

Experts suggest that the population will continue to age and the annuities reflect this assumption. These assumptions are based on longer-term projections and experience that some people have been loyal customers for years. Loyalty is and will be rewarded as people will likely receive more of the wealth provided that they remain with the company.

The company’s chief executive officer, Tim Breedon is satisfied with its achievements to date as he said: “We are confident about the growth prospects for Legal & General.”

The insurer’s projections suggest that they will continue to rise in the near term provided that it and the industry run smoothly. A business as usual approach suggests that the revenue will increase as the company performs well at home.

Insurers encourage the public to utilise their services knowing that they will have a larger nest egg when they finally stop work. A larger nest egg will benefit both the public and the insurer as both will forge ahead and improve their position. The company believes that it can become everyone’s first and only choice in the coming decades.

The Strategic Society Centre has stressed the need for insurers to reform their policies to encourage more retirees to buy health cover. Currently only four per cent of Britain’s 120 000 self funded retirees have immediate needs annuities.

Research shows that even if more people bought annuities the majority would have to rely on the national public health service for help. This is concerning as Britain has an aging population which will only worsen as time progresses.

James Lloyd, director of the Strategic Society Centre, said: “How we fund the long-term care of older people is one of the biggest policy challenges of our time.”

Mr Lloyd claimed that there are a range of factors that will limit markets capacity for growth. Annuities are suitable for people who can afford them and require long-term financial stability. Retirement village and hostel residents can use annuities to meet their needs.

Insurers need to recognise the importance of meeting people’s immediate needs. Companies will increase their products if insurers focused their attention on the costs of residential care. Retirees will buy immediate needs annuities if they think that there is a suitable policy for them. Insurers hope that their efforts will achieve greater funding across the region.

Increased funding can be achieved by using tax payer’s money to create a pool for people’s health needs. Social services can include crisis money as part of their policy to relieve the stress on the national service. More funds will enable insurance companies to offer better services for more people to use.

Retirement Solutions (UK) have launced a new guide for Solicitors and their clients covering the retirement solutions product groups that they are likely to come across. These products are:

• Equity Release
• Long Term Care

Retirement Solutions is an equity release specialist and has advisers nationwide to deal with enquiries from solicitors.

Equity release and Long term care requires specialist qualifications that advisers need to have passed before they can advise clients on the products. As there are around 10 Million pensioners in the UK and the fact that people are living longer means that many will enter into care.

Downloand the Free guide here.