Published by Kauders Portfolio Management, Authorised and regulated by the Financial Services Authority
'Tis the season when insurance companies admit their wondrous skills in looking after your savings. This year, those wondrous skills are being transformed into shortcomings as bonus rates are manipulated to give lower total returns.
Equitable Life policyholders (including many professionals) have just had a particularly sharp lesson in the principle that "with losses" follows "with profits" as surely as night follows day.
Despite that warning, despite the lower bonuses, what does a pundit have to say? "With profits annuities set to get cheaper .. new era for pensioners". Our advice is to IGNORE with profits annuities. They are a peculiarly risky way of generating income, with the likelihood that as losses spread, so your income will be CUT. Any changes in mortality rates are irrelevant. These schemes are more likely to cut pensioners' income as the equity bear market unfolds, rather than improve it.
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