Further pension changes- sell your current annuity

[Zak33]

Budget 2015: George Osborne set to unveil pension reforms - http://www.bbc.co.uk/news/uk-31892518

George is doing strong work. I imagine there are a few pension companies wondering how this might actually work....but it does equalise the rules

[herulach]

The problem being of course that people are notirously poor at estimating their own financial needs and consistently underestimat boteh their lifespan and living expenses. I've always thought compulsory annuty purchase was a good idea on the basis that it provides the best level of income without causing people to blow their pension and become a burden on the state.

This is essentially a gift to people who have enough of a pension pot to both release significant sums of cash and make an income from it.

[Saracen]

If it provided the "best" level of income, I'd be inclined to agree, at least, up to a point .But, IMHO, it doesn't. What it does do is basically give you ONE chance to make a huge financial decision, then effectively lock you in to that provider.

It also fails to take into account that while an annuity locks you into a consistent income, as you get older, short of care home financing, your financial needs drop. A lot of people cannot, for instance, travel extensively until they retire because of lack of time, after which they have a once-in-a-lifetime golden chance, before age and infirmity mean it's unpleasant, or impossible, to do these things.

Or, at a later point, you decide you need to adapt your home, perhaps building a large conservatory, or move from a house to a typically more expensive bungalow because you can no longer cope with stairs.

Or, you want to adopt an investmrnt strategy that's more versatile, more hands-on, but perhaps more risky, than an annuity. My risk, my choice, and my dealing with the results.

Or some combination of all these.

So .... someone with a decent pension provision can't be trusted to decide how to spend their own money? As far as I'm concerned, it us for the individual to decide whether to invest in income-generation, or in some capural expenditure, or even to 'live a little' while they still can, PROVIDED the taxpayer isn't expected to pick up the bill later.

Oh, and I bet the pension industry hate this. No longer are people forced to buy a one-way bet on that company's products, with little or no escape route. Now, they will have to provide competitive products not just to get our money, but to then keep it.

In other words, I'm all in favour of this, and it's now returning responsibilty for both managing my assets AND providing for my future, to me .... a long with responsibility for living with the consequences of any indulgences. It's about time the state butted out more often.

[Splash]

PROVIDED the taxpayer isn't expected to pick up the bill later.

This is the bit that our friend George seemed to avoid. Cynical, moi?

[peterb]

What, people being given responsibility for their own finances? Shocking!

</irony>


However, I don't think this applies to the basic State pension, so that will remain as the basic safety net.

[Splash]

What, people being given responsibility for their own finances? Shocking!

</irony>


However, I don't think this applies to the basic State pension, so that will remain as the basic safety net.

If so why didn't he state this in the interview at http://www.bbc.co.uk/news/uk-31892518 ? It smacks to me of building a future tax loophole, the kind of thing that Osborne and his pals are always railing against.


But I'll be happy to be wrong.

[BobF64]

This is the bit that our friend George seemed to avoid. Cynical, moi?

Not really a surprise, how many votes would you lose for saying "those that get it wrong will be left to starve to fend for themselves with minimal state support"?

[peterb]

Not really a surprise, how many votes would you lose for saying "those that get it wrong will be left to starve to fend for themselves with minimal state support"?

And that would also be statement of the blindingly obvious (although that doesn't stop politiitions on other issues!)

[Smudger]

Annuities have been terrible value for a few years now, so yes, this will give the industry a kick up the backside to provide better deals.

From the providers' point of view, they've known about this coming up for some time, and have been able to prepare for it, but the current annuity holders being allowed to sell? Was never mentioned up until now. I have a little sympathy for the pension providers for the short notice they've been given for this change. Only a little though.

[Saracen]

Of course, one potential fly in this ointment is that in order to sellvan existing annuity, there has to be someone prepared to 'buy' it. And, at what price?

After all, it's not exactly something you can put in the local free ads.

My suspucion is that the only realistic 'buyer' will be some kind of surrender value from the current supplier, and what controls are there over that 'value', and what profit margin will be built in for them?

I suspect they'll have sellers by the short and curlies.