Pensioners warned over inflation risk
Level conventional annuities, which provide a level retirement income for life, could be adversely affected by inflation, financial advisers have warned.
According to a survey of financial advisers carried out by Prudential, nearly 90 per cent of those questioned said they were concerned that the effects of inflation on level conventional annuities were not being considered by savers.
The concern is that increases in the cost of everyday items could seriously affect spending power in the future.
"Retirees don't realise the impact that even modest changes in levels of inflation will have on the purchasing power of their income, and therefore it is important to seek independent advice before choosing an annuity," commented Prudential's Aston Goodey.
"One in four 65-year-old men will live into their 90s, so securing a lifetime income in retirement is vital.
"Annuities can provide the security of an income for life and it is therefore important the right choice of annuity is made to suit individual circumstances."
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