What does the Chancellors pension revolution mean for us?

Thrugelmir

Proxy wrote: »

Annuities will not suddenly produce better returns. Despite popular belief, they are not doing their best to fleece customers. They are doing their best given regulation, investment returns and inherent uncertainty.

I dislike the word fleece. Let's say profitable trading margin. Given the size of the annuity market. there is no reason why a player cannot break ranks and offer a better value for money product.

The rush into SIPPs by the unwary is a concern. As like property prices, stock markets fluctuate far more than people imagine.

DiggerUK

Proxy wrote: »

Annuities will not suddenly produce better returns......... Current rates on purchased life annuities may give you an indication there.

Those providing annuites will have some serious competition for funds.
It could become problematic for the government, as it is how a lot of public borrowing gets financed.

If the budget is voted through, then current figures mean s0d all, the retirement funding game will be turned inside out.
..._

lvader

DiggerUK wrote: »

So she will be squandering it slowly then, or is that only what other people do.
Seems that you are in favour of the budget proposals.
Lets hope that the pension is invested safely. Gold funds maybe???
..._

Once she turns 66, the income from the state pension and a small DB pension will mean she will earn about 40% more than what she earns currently working part time. She is already paying into a DC work pension but current rules would have made it very difficult to take the money out when it will be needed the most. With the new rules she can use the money from the DC pension to provide income until the state pension kicks in. Early retirement is looking a lot closer than it was yesterday.

Proxy

Thrugelmir wrote: »

I dislike the word fleece. Let's say profitable trading margin. Given the size of the annuity market. there is no reason why a player cannot break ranks and offer a better value for money product.

Trading margins for the most competitive providers are not all that high and carry significant long term risks. Regulatory requirements on reserving and solvency are incredibly onerous and are the biggest restriction. At the top end competition can be fierce and if there was a possibility of offering more it would have happened.

Suspect this may lead to more innovation, which isn't necessarily a bad thing.

Proxy

DiggerUK wrote: »

Those providing annuites will have some serious competition for funds.
It could become problematic for the government, as it is how a lot of public borrowing gets financed.

If the budget is voted through, then current figures mean s0d all, the retirement funding game will be turned inside out.
..._

The purchased life annuity market is a perfect example. It has the competition for funds, as it's bought with non pension money. It doesn't offer magically better returns.

DiggerUK

lvader wrote: »

......... Early retirement is looking a lot closer than it was yesterday.

Nice feeling, innit.
..._

harz99

kidmugsy wrote: »

Do it yourself - it's just schoolboy algebra.

It's a very, very long time since I was a schoolboy and I didn't do algebra so I'll have to pass on that one.


Shame, I hoped you were going to show us how it all worked.

zenmaster

Let me get this straight.

Under the proposed new rules if I have a pension of £30k I can transfer all of that to my current account tax free. If, however, the fund is £30k+£1 I can only take £7,500.25p, with the remainder taxed at 20%.

Is that the case?

That doesn't seem very equitable or fair.

tony4147

I'm glad to see George is doing something about the state of the pension system, it has been a long time coming, I know there will be more details to come.
Let's pray that the other crowd never return to no.10, let's not forget what Gordon did.

Drp8713

zenmaster wrote: »

Let me get this straight.

Under the proposed new rules if I have a pension of £30k I can transfer all of that to my current account tax free. If, however, the fund is £30k+£1 I can only take £7,500.25p, with the remainder taxed at 20%.

Is that the case?

That doesn't seem very equitable or fair.

That's because it's wrong.

30k is the new limit for trivial commutation. If all of your pension benefits fall below this amount you can commute them into one off payments, you can have 25% tax free and the rest is taxed.

If your pots are over 30k you can't, but if any of them are under 10k you should be able to take those. I assume you will still need to be 60 for trivial commutation.