Did you know your Retirement Income has reduced dramatically over the last 9 years?

All Pension schemes are linked to the performances of global stock markets, as well as Central Bank’s interest rate policy such as ECB, The Federal Reserve and The Bank of England. Another key role is that these institutions raise huge amounts of money to help fund government expenditure plans, by issuing “Sovereign Bonds” to global pension schemes. In the UK, these are known as “Gilt Edged Securities” or “Gilts”.      

In simple terms, HM Treasury wants to raise a set amount of money e.g. £100m for a set period of time, normally 20 years. The Bank of England will offer a guaranteed coupon of interest rate to be paid each year until maturity.

  • Back in April 2010, the 10-year government bond was yielding 4.0% and the 15-year bond was yielding 4.5%.
  • In July 2019 – 10-year government bond was yielding 0.7% and the 15-year bond was yielding 1.3% .

As you can see Gilt yields have fallen dramatically as this asset class is seen as “safe investments”, due to concerns over Global economic growth, Brexit and US / China Trade Wars.

What does this all mean and why should I be concerned about my retirement income?

The fall in 10 and 15-year Gilt yields has had a direct impact on investors’ retirement incomes in the form of Annuities.  An annuity is an investment product that allows you to swap your pension savings for a guaranteed regular income that will last for the rest of your life.

As example in April 2010, a Retirement fund of £100,000 provide a guaranteed income for life of £7,150pa.

Today the same amount would ONLY provide an income of £4.650pa, a massive reduction in income of 35%!

To achieve the same amount of income as in 2010, your retirement saving would need to increase from £100,000 to £151,000.

Richmond House Wealth Management take on the “moral obligation” to make sure that our clients have sufficient income when they decide to give up work. We work with our clients on a regular basis to make sure they achieve their financial objectives.

Call one of our Financial Planners on 0333 241 3350 to arrange a meeting to make sure you are on “track” to succeed with your retirement income objectives.


Nigel Taylor Cert PFS, Dip FA


This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned about the content hereof and any such action or inaction. Professional advice is necessary for every case