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Sep 2009 - Q1

P

phantom

Member
The examiners' report contains the following sentence:
"Since your 2008 statement was issued, the cost of purchasing an annuity has increased."

This is not correct! It is the "expected cost of the annuity that has been revised upwards".

a. It is simpler, but inaccurate, to explain that the cost of a now more expensive annuity have been passed onto you in the form of higher contributions.
b. What should have been explained is that "we now expect the annuity to cost more than our previous assumption, hence the higher contribution".

I think it was because "b" is more negative, that the examiners' report went with "a". Any comments on this?
 
Can anyone replicate the comment in the examiner's solution that if the policyholder continues to pay in £50 per month, they would only be able to purchase an annuity of around £2300 p.a. ? I tried and I got sometime more like £4120 p.a.
 
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