Channel 4 - how to blow your pension

dunstonh

Why are annuities definitely the wrong choice

Crazy isnt it.

Most of the public didnt know what an annuity was before. Now they still dont know but have been told they dont want one and dont have to have one.

Yet in reality, when you go through someone's financial circumstances and they mention things about not wanting risk and you see they dont have the capacity for investment loss and they tell you that they want a guaranteed income for life, they are the ones that should have an annuity.... but not if you follow the media.

PensionTech

they are the ones that should have an annuity

Agreed. I initially wrote a big ranty post (before replacing it with my little ranty one) about how people currently receiving annuities will either have taken advice and/or made a thoroughly considered decision re their retirement or not. If they have done that, then chances are the new freedoms won't be the right choice for them any more than drawdown was the right choice before. If they haven't done that, then are these really the kind of sophisticated investors/money managers who should be using the new freedoms?

But that would go against C4's shouty "annuities are evil" campaign.

le_loup

dunstonh wrote: »

but not if you follow the media.

Or a great many people here who thing this change is the best thing since sliced bread in spite of knowing the low level of knowledge of the average visitor to this site!

atush

Daniel54 wrote: »

Totally agree

In last weeekend's Sunday Times,the Editor of the Money section.Becky Barrow, wrote in the first paragraph of her back page editorial that the pensions shake up means that annuities will no longer be compusory,and in her second paragraph that those who are most angry are the ones who would not have bought an annuity if they had known the rules forcing them to buy one were about to be abolished.

She is quite obviously not restricting these statements to the current rules concerning the age of 75.The pension reforms of 2006 apparently never happened.

I have the article in front of me and you have reminded me to write an email of complaint to her about lazy and inaccurate journalism.

I am not a letter to: kind of person but am thinking of writing to both as I was quite incensed. I was muttering over the ST just like my husband does to the TV

And that poor sick woman ripped off by Aviva wasn't- she din't have to buy an annuity or an enhanced annuity? Her complaint was she wanted to help her daughter buy a house- so why didn't she give her daughter the TFLS then? Beggars belief.

gadgetmind

le_loup wrote: »

Or a great many people here who thing this change is the best thing since sliced bread

Well, it is.

in spite of knowing the low level of knowledge of the average visitor to this site!

Ultimately, while I want everyone to have good outcomes, and am happy to suggest ways that people can achieve this, but it's their money.

As dunstonh said, people don't blow their ISAs nor their unwrapped savings without thinking it through, so why should they do this with pension funds, and why should we particularly cry a tear if they do?

kidmugsy

gadgetmind wrote: »

As dunstonh said, people don't blow their ISAs nor their unwrapped savings without thinking it through, so why should they do this with pension funds, and why should we particularly cry a tear if they do?

Because they will later live at our expense. Betya!

gadgetmind

kidmugsy wrote: »

Because they will later live at our expense. Betya!

Some might, but should we shackle the majority just to try and protect a minority?

tell_it_how_it_is

It's fantastic in my eyes, and gives me increased hope of the dream of retiring at 55 (loosely, on savings for 5 years, then most of first pension 60-65, then second pension from 65, with state pension to follow). Here's hoping.

hugheskevi

The link I put in response to the earlier question about value of all pension pots was not a very good one - this one is much more appropriate, and shows amongst many other things:

• 72% of individuals aged 55-64 had pension wealth
• Of those individuals with pension wealth (including DB and DC pensions), the median value of total pension wealth was £135,900
• Pension assets are biased toward men - 81% of 55-64 year old men have some pension wealth compared to 63% of women, and the median values of total pension wealth are £174,100 and £99,100 respectively
• Perhaps relevant to the discussion above, the richest 10% of households with pension assets hold almost half of all pension assets

I think the programme would have been much more interesting if it addressed the challenges of making £135,900 cover the whole of a retirement with uncertain end-point. That could start by discussing adequacy, moving on to simple but in-depth focus on a small number individuals and how they consider investment risk, financial shocks, longevity risk, etc. It would be interesting to see if perspectives changed with greater thought.

It is telling from the figures in the link that DB pension still dominate pension value, particularly for pensioners and older individuals (who of course have much higher pension wealth than younger individuals). We are still some way off cohorts of retirees having large numbers with DC pension only, and DB being relatively rare. I think this is interesting as our experience at country-level with DC pensions is still really only about a 15 year experiment, with very little experience of retirees in particular depending solely on DC, as most of those who have DC wealth as a large % of their total pension wealth are either very wealthy or still in the accumulation stage.

DancingBadger

hugheskevi wrote: »

I think the programme would have been much more interesting if it addressed the challenges of making £135,900 cover the whole of a retirement with uncertain end-point. That could start by discussing adequacy, moving on to simple but in-depth focus on a small number individuals and how they consider investment risk, financial shocks, longevity risk, etc. It would be interesting to see if perspectives changed with greater thought.

Agreed, but Channel 4 is the broadcast equivalent of the Daily Mail - sensationalist, badly researched, and poorly presented. Its target audience likes to be entertained and/or shocked, not educated.