UK Gilt Market Turmoil: Impact on Pensions and Annuities

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UK Gilt Market Turmoil: Impact on Pensions and Annuities
PENSIONS,ANNUITIES,BOND MARKET

Hargreaves Lansdown explains how falling bond prices in the UK gilt market might affect retirees' pensions and annuity income. While there are concerns for those nearing retirement invested in lifestyling arrangements, the firm advises against hasty decisions. It suggests delaying income withdrawals until the market stabilizes and highlights the potential for higher annuity incomes due to the spike in gilt yields. The firm also reminds individuals that they don't have to annuitize their entire pension pot at once.

It’s rarely good news when the UK bond market is headline news, so many Brits may be worried about the implications of the gilt market turmoil on their finances. Financial services firm Hargreaves Lansdown has explained the impact on pensions and annuities. Here’s Helen Morrissey, their head of pensions analysis: “Falling bond prices could cause concern for retirees who are coming up to retirement invested in lifestyling arrangements.

These move the member out of equities and into bonds the closer they get to retirement. However, there’s no need for knee-jerk reactions. Those who intend to remain invested through income drawdown have the ability to hold fire on drawing an income until the markets have recovered. Those who are looking to annuitise some or all of their pension pot will also likely find that the spike in gilt yields can push the income available from an annuity upwards, softening the impact.

 

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