The mechanics of drawdown

grey_gym_sock

i don't want to place obstacles in the way of ppl who are capable of being grown adults. but not everybody is capable of being an adult about financial services (even if they are about other areas). i'd like a default option that works for the latter group, without preventing the former group from doing their own thing (including drawdown without advice).

annuities are simply not working well for the group with low confidence/knowledge of finance. they're given a rubbish annuity offer, together with a prominent notice that they could shop around, and large numbers of them take the rubbish offer. that's a broken system.

it's perfectly possible to have a system where the result for ppl who go for the easiest option is a more competitive annuity rate than they get now. without restricting the options for ppl who know what they want.

gadgetmind

grey_gym_sock wrote: »

it's perfectly possible to have a system where the result for ppl who go for the easiest option is a more competitive annuity rate than they get now. without restricting the options for ppl who know what they want.

Yes, it is, but that doesn't seem to be what's being proposed.

dave875933

or alternatively for schemes to offer a service itself.

Could not all the schemes be forced to offer the same standardised service (to which all providers must subscribe), which would show an illustration from the lowest competitor as well as from that provider? Of course it should also allow individuals to login and change the assumptions (with special note about enhanced annuities).

I don't think the article says that an IFA would be needed for drawdown by the way, they seem to be talking about annuities? But for that matter, drawdown illustrations (including fees) could also be provided (obviously with notes about the rules for drawdown).

It's not very free market but then neither is forcing people to use any intermediary or auto enrolment.

The market has produced similar for car insurance, although some companies even used to boast about not being included!

dave875933

As for Fidelity. That's very very sneaky!

gadgetmind

dave875933 wrote: »

I don't think the article says that an IFA would be needed for drawdown by the way, they seem to be talking about annuities?

True, but between (some) providers requiring advice before drawdown, and Labour wanting to use the power of law to *force* people to take advice as part of arranging an annuity, we're between a rock and a hard place with the IFAs laughing all the way to the bank.

jamesd

The uninformed can be protected instead by measures like making offering of advice mandatory, prohibiting a built-in annuity offer that is more than 5% below the best available based on a mandatory offered brief medical questioning to see whether there might be reduced life expectancy. Optional for the consumer to complete it but bold red words at the top: "the worse your health seems, the higher your income will normally be".