“Most people at this stage of their life look for certainty and security and the prospect of drawing an income from a fund that is falling in value will be deeply concerning.
“Although drawdown is hugely popular, savers in drawdown run the risk of running out of money in retirement. An alternative, which has become increasingly popular over the past few weeks, is a fixed term annuity.”
Annuity rates plummet
However, savers will not be getting the best deal on annuities at the moment as rates have fallen to record lows.
According to data from Moneyfacts, the average annual standard annuity income for an individual aged 65 (based on a single life £10,000 level without guarantee annuity) fell by 6 per cent in Q1 2020, leaving the average annuity income 1.7 per cent lower than its previous record low in October 2019.
The plunge in rates is due to a decline in gilt yields, which have also fallen as a result of coronavirus and current market uncertainty.
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