Sunday 25 June 2017

Pension costs here are set to increase

Saving for a pension just got harder. Photo: PA
Saving for a pension just got harder. Photo: PA
Charlie Weston

Charlie Weston

Saving for a pension just got harder. That is because the election of Donald Trump is set to make it more expensive to buy a pension annuity in this country.

Experts said the cost of buying an annuity will rise due to uncertainty in financial markets after the US election.

It comes on the back of a three-year surge in the cost of annuities. Many people buy an annuity with their pension pot when they retire. An annuity pays a fixed sum of money each year.

Jerry Moriarty of the Irish Association of Pension Funds said the outcome of the US election would make annuities more expensive.

Low interest rates already mean it now takes a €300,000 pension pot to buy an annuity paying €10,000 a year as a pension. Three years ago someone buying an annuity would have received the same €10,000 a year for an outlay of €200,000. This means the cost of a €10,000 a year annuity has gone up by €100,000 in three years.

Irish Independent

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