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Bulk annuity rates are driven by a range of variables, including interest rates, stock market performance and demand from pension schemes winding-up.
The Treasury continues to work closely with the Financial Services Authority, the Department for Work and Pensions and other stakeholders to maintain an up-to-date understanding of the bulk annuities market.
The estimate that approximately 60 per cent. of money saved in personal accounts will be new saving is based on the results of a literature survey carried out for the Department for Work and Pensions1.
The 60 per cent. is the middle point of a range of 50-70 per cent. that was put forward in the report as a plausible assumption for the average level of new savings in NPSS or similar personal account schemes.
It is this range that is used in the White Paper and the accompanying Regulatory Impact Assessment, which note that personal accounts would generate pension savings of £7-8 billion per year, of which approximately £4-5 billion are expected to be additional2.
1 John Hawksworth, PricewaterhouseCoopers, 2006, “Review of research relevant to assessing the impact of the proposed National Pensions Savings Scheme on household saving”, DWP Research Report No373, p.3.
2 See for example Regulatory Impact Assessment: Overview, p. 10.
The British Overseas Territories where UK state pensions are indexed against inflation are Bermuda, Gibraltar and the Sovereign bases on Cyprus.
UK state pensions are not indexed against inflation in Anguilla, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Montserrat, Pitcairn Island, South Georgia and South Sandwich Islands, St. Helena and Dependencies (Ascension Island and Tristan da Cunha) and Turk and Caicos Islands.