Shares rally after worst quarter for pensions with the value of the average fund falling 15.2%
Shares around the world rallied as investors looked beyond grim economic figures from the United States and cheered an update on a potential Covid-19 treatment.
The FTSE 100 index rose 156.75 points to 6115.25 – its highest level since March 6 – despite data showing the US economy shrank 4.8 per cent in the first quarter.
Investors were buoyed by California biotech company Gilead Sciences, which said its experimental antiviral drug remdesivir helped improve outcomes for patients with Covid-19.
The FTSE rose 156.75 points to 6115.25, closing above the 6000 mark for the first time since early March, despite data showing the US economy shrank 4.8 per cent in the first quarter
But the rally provides only some respite for savers and investors. While the FTSE 100 is up 22.5 per cent since falling below 5000 last month, it is still down 19 per cent this year.
Experts warned that the coronavirus crisis has had a ‘devastating’ impact on retirement plans as the value of pension pots tumbles and annuity rates hit record lows.
The average pension fund fell 15.2 per cent in value in the first quarter of the year, according to data firm Moneyfacts.
Meanwhile rates paid on annuities, which offer a guaranteed income for life in exchange for a pension pot, fell 6 per cent between January and March to a new low.
Those retiring now have never received less for their life savings.
Moneyfacts said the average retirement income for someone saving into a pension fund before buying an annuity is down 18.7 per cent since the start of 2020.
It means a saver who had put away £100 every month for 20 years would have a pension fund of £41,388.
Yet, if they now bought an annuity aged 65, they would receive just £1,663 a year.