MSE News: 'Pooled' schemes to boost pensions unveiled in Queen's Speech

Former_MSE_Helen

The Queen outlined the Government's agenda for the coming session at today's state opening of Parliament...

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'Pooled' schemes to boost pensions unveiled in Queen's Speech



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Pincher

The Pension Tax Bill: This will abolish the requirement for pensioners to buy an annuity – a guaranteed income during retirement – from April 2015. So provided you're over 55, you'll be able to take as much of your pension as you like, when you like




Got to time it right to avoid clashing with maturing investments, but otherwise there is now every possibility of denying the annuity vampires from keeping my money when I die. If any money is left when I hop it, it can go to somebody I actually want it to go to.


I assume final salary schemes stay as they are, so you still get a monthly income like you signed up to get, when you joined the scheme.

grey_gym_sock

Pincher wrote: »

This will abolish the requirement for pensioners to buy an annuity

the politicians must have announced the abolishment of this requirement more often than they've put in expenses claims ... (it actually ended some years ago.)

denying the annuity vampires from keeping my money when I die

the what? you do understand that, if you buy an annuity, your own capital is than returned to you over your remaining life expectancy? so you get less capital back than you put if you live a shorter time than expected, but more than you put in if you live longer than expected? and that this arrangement can be a very effective way of meeting ppl's needs to spend more money when they're alive than when they're dead? (... i'm sure you do - i'm just spelling this out in case anybody who doesn't understand is reading.)

System

grey_gym_sock wrote: »

ppl's needs to spend more money when they're alive than when they're dead? (... i'm sure you do - i'm just spelling this out in case anybody who doesn't understand is reading.)

That's not always true. Older people who have enough money to meet their own needs often derive immense satisfaction from passing on an inheritance to their children. To that extent therefore, it is certainly possible to "take money with you" or to "spend it after you are dead".

Money may only be there to provide satisfaction in life, but one form that satisfaction can take is in knowing that one has provided for someone else, even after one's own death.

grey_gym_sock

if i'd said that ppl had no need to spend money after they're dead, that would have been untrue. i actually said they had less need - which is true: you can get satisfaction from giving money to somebody else when you are alive or dead, but you can only spend it on yourself when you're alive.

Proxy

I disagree. I will receive no satisfaction when I'm dead.

I'll be dead. It's a pretty emotionless state.

grey_gym_sock

let me rephrase that: you can receive satisfaction, when you're alive, from knowing that your money will go to somebody else when you're dead.

OK?

Pincher

Proxy wrote: »

I disagree. I will receive no satisfaction when I'm dead.

I'll be dead. It's a pretty emotionless state.

I am more concerned about gnashing of teeth now, knowing that the money I scrimped and saved for will end up in some opportunistic annuity manager's Lambourghini fund.


Another bugbear is, the house I die in will be taxed partially at 40% IHT. They should make the house you live-in exempt from inheritance tax, up to a threshold like £1million. Most of the houses around here are £700k+ already.

grey_gym_sock

Pincher wrote: »

I am more concerned about gnashing of teeth now, knowing that the money I scrimped and saved for will end up in some opportunistic annuity manager's Lambourghini fund.

ok. so i got it wrong - you don't understand how annuities work.

Another bugbear is, the house I die in will be taxed partially at 40% IHT. They should make the house you live-in exempt from inheritance tax, up to a threshold like £1million. Most of the houses around here are £700k+ already.

you don't want (your estate) to pay tax. but why shouldn't it? you don't need your house when you're dead. and the more that's raised through IHT, the less needs to be raised through other taxes. IHT seems like a very fair tax to me, except that there are too many loopholes, not too few.

(this isn't the forum for ill-thought-out, random complaints, BTW.)

Pincher

Annuity preys on the fear of running out of money when you get old.
The annuity provider has no intention of losing money on the deal, so the annuity rate is offered heavily in their favour. The safety margin they build in is for their benefit, not yours. You need to hold on to life in decrepitude in a grudge match just to get fair value from the deal.

I know from family history to expect to live to circa 75, and will not even receive back the full principal in my pension pot at current annuity rates. I don't actually need the pension, as I have enough to live on anyway. I simply don't want my money taken by financial hyenas because red tape prevents me from getting at my money.

rpc

Pincher wrote: »

Annuity preys on the fear of running out of money when you get old.

A rather loaded sentence. Annuities are there to guarantee that you won't run out of money. Guarantees are expensive.

If you are prepared to take on some risk, there are already alternative ways to take an income from your pension. You may get a higher income, you may have a pot to leave when you croak, you may run out of money and spend your later years with nothing but the state pension.

It comes down to risk - most people are risk averse and are suited to the guarantee.

Annuities have not been required for a while now (is this the third time we've been told that requirement has been abolished?). Don't want one? Don't buy one.