- Friday, 12 February 2010Pensioners may be seeking
IVA advice following warnings that they could face a 30 per cent drop in their retirement income.
Those choosing to retire after 2012 are likely to face a "massive plunge" in pension income as a result of new European Union (EU) legislation, according to retirement income advice firm Annuity Direct.
The new legislation, Solvency 2, is designed to lower risk across pan-European insurance giants, and has been given the go-ahead by Brussels-based Eurocrats.
Yet Annuity Direct states this will have a significant impact on the retirement income of up to 500,000 pensioners.
Spokesperson Bob Bullivant said the typical income from a personal pension could drop from an average of £10,000 a year to around £7,000 as a result.
"From 2012 life companies will be obliged to value their annuity liabilities using government gilt rates, rather than the current preferred option of corporate bonds, which give a higher yield," he said.
"The result of this lower income to the life giants means they will have to hold more capital to meet their annuity pay-out liabilities – and the knock on impact is that annuity rates will fall."
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