MSE News: Compulsory annuities scrapped for all in pension shake-up

it is not "scrapped for all", only those with large pensions

Don't say that the Government are only helping the rich :eek:

Reaper wrote: »

At last a sensible government policy on pensions.

By the way the post above is wrong as it is not "scrapped for all", only those with large pensions. Fortunately the actual news story doesn't share the same title.

Does the £20k threshold go up in line with inflation? If not it will rapidly stop serving any useful purpose.

You can only pursue flexible drawdown (i.e. remove capital from a pension) if you have a large enough pension to satisfy MIR, but the way I read the proposals you could go for capped drawdown - of the sort you can currently do up to age 75/77 - regardless of the size of your pension. So I think the post is correct.

Disappointing. This is a minor technical change dressed up as something grand - not the kind of revolution the situation calls for. The annuity market will still have access to 90% or so of savers with all the opportunities for things to go from bad to worse. No other country - not even the free market bastion of the US - goes in for compulsory annuitisation - so either it doesn't really work or there are better alternatives the government is refusing to contemplate through sheer (small c) conservatism - oh and producer interest capture, of course.

There was an opportunity with 'personal accounts' to bring in workplace cash accounts (that 1% numpty tax relief is a joke) which would allow the accumulation of useful amounts for low earners. The states already doing that were Oz and Singapore, with NZ following.

It's a joke that 75% of a low earners modest pot (simply because £1 in eight saved came 'from' the government) has to be used to 'purchase' income rather than being theirs by right. We have the trivial pension rule, yes? Well it doesn't take enough people 'out of' (to employ the taxation aphorism) having to buy an anniuty.

£20,000 a year?

Is that not gold plated?

I think everyones pension should be capped to a maximum of £18000 a year or others cry why do they get a gold plated pension and I don't?

sjg1950 wrote: »

I am disappointed with the figure of £20,000. If the idea was to stop people claiming pension credits it couldhave been set lower, so still giving people on lower incomes the right to chose how they arrange their finances. I am now very glad that I hesitated to open a Sipp, and so be forced to use this to buy an extra annuity, as I am lucky enough to have a retirement income of £15000, the greater flexibility of capital is more important, but I had hoped to be able to use the tax relief to save for later years and so make up to some extent for the loss due to CPI rather than RPI, being applied

Having less than 20k p.a. secured income doesnt stop you doing drawdown. It just stops you taking an amount above the limit (to stop you from eroding the pot too fast.