An overview of annuities: Part One

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Annuities are a complex minefield with many potential pitfalls. To help you understand and decide on the best option here is a simple guide on annuities.

What are they and how do they work?

An annuity is simply a financial product where you exchange a lump sum for income. Using the example of a pension scheme you usually exchange your pension fund for an income payable for the rest of your life.

The rate of the annuity is set by ...

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Government hit borrowing target

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Official figures from the Office for National Statistics (ONS) have revealed that despite exceeding the borrowing target for March the overall annual figures have hit the target.

A breakdown of the figures published showed that public sector net borrowing in March, excluding bank bail-outs, came in at £18.2 billion. Due to a shortfall in borrowing during previous months the government have met the overall £126 billion for the year.

By meeting the target set the government have made a reduction of almost £11 ...

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Interest rates predicted to remain at 0.5%

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Economists, mortgage market experts and fund managers have predicted that there will not be sufficient improvement in the UK economy to enable interest rates to rise before the end of 2013. The experts have estimated that the base interest rate will remain at the record low level of 0.5% until 2014, and that it may not rise for another three to five years.

In contrast other economists are doubtful that there will be enough improvement in the UK economy to enable ...

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UK unemployment falls

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A report by the Office for National Statistics (ONS) has found that unemployment has fallen by 35,000 to 2.65 million over the December-to-February period. This is the first registered fall since early last year.

The official figures now report a level of 8.3% unemployment which is the lowest recorded level since summer last year.

ONS representative Nick Palmer said, “If you look at the longer-term picture, unemployment rose quite strongly during the summer of last year, then the increases tailed off a ...

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MP’s call for pensioner compensation

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A report by a group of MP’s has stated that the loss to pensioners and savers caused by quantitative easing should be offset by government compensation.

The group called the Treasury select committee has recommended that the Bank of England calculate an estimation of, “the overall benefit and loss,” to those affected by the government’s programme.
A spokesperson for the group said, “Loose monetary policy, achieved through quantitative easing and low interest rates, has redistributional effects, particularly penalising savers, those with ...

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UK economy will stall until 2013

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The Ernst & Young Item Club have released a report revealing that the UK may have evaded a double-dip recession, but the economy will stall for the rest of the year. The Bank of England’s monetary policy measures may have improved economic confidence but now larger businesses need to step up and use stockpiled cash to increase growth.

The report forecasts poor growth of 0.4% this year, rising to 1.5% in 2013. However the independent Office for Budget Responsibility, which delivers ...

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Report calls for a reduction in pension pot projections

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A recent report commissioned by the Financial Services Authority (FSA) has stated that the projection rate for investment returns should fall from 7% a year to about 6%.

The report produced by PricewaterhouseCooper has discovered that the standard projections used by pension and investment companies to indicate to savers how much they might receive in the future are too high. A reduction is needed to reflect the difficult economic climate and this has been predicted to fall to between 5.25% and ...

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House prices rise in March

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Halifax have published a report that the average house price saw a 2.2% rise during March. The bank has owed the rise to first-time buyers that were rushing to jump on the property ladder before the end of a stamp duty holiday.

Martin Ellis, Halifax housing economist, said: “Efforts by first-time buyers to beat the expiry of the stamp duty holiday at the end of March have probably increased sales in recent months and may have helped to support prices.”

The average ...

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ISA allowance deadline looms

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This Thursday is the last day to secure up to £10,680 in a tax-free savings account. Investors are being warned to use the tax-free allowance before it’s too late.

In this difficult economic climate individuals would be wise to put money into an ISA account and not leave it in a standard savings account. This is because an ISA allows you to protect your money from the tax office as everyone is entitled to a tax free allowance. If for instance ...

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Call for improved interest rates for children

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Falling interest rates on children’s savings accounts give little encouragement for the younger generation to learn good financial habits.

With recent plans to link the state pension age to improved longevity, experts have calculated that the state pension age could rise to as high as 80 for those born today.

The only way for children to retire at an earlier age is to build up personal savings that will supplement a private pension until the state pension kicks in.

A survey of savings ...

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