Why Americans get bigger annuities

The Daily Telegraph claims that Britons get lower annuity rates than Americans because of heavier EU regulation.

A typical American will get an annuity rate of 7% where a Briton will get 6%, it says. But the paper also quoted one expert who said people are mistaken in thinking of annuities as investments and judging them as bad value when comparing them with shares and bonds. He says that because of the ‘income for life’ guarantees provided by annuities, they are in effect insurance against running out of money.

For many people, the guarantees provided by annuities are still valuable. We expect many people to ‘mix and match’ with the capital from their pension pots when the rules change next April, using some to buy guaranteed income and some to invest so that the capital can be passed on to their families.