New pensions freedom under attack before they start

jamesd

Just raising the age isn't very clever since it'll force people not to use pensions for some of their retirement investing. A soft rise that allows taking before any particular age if there is enough money in the pension pot to fund say £10,000 a year until reaching state pension age using drawdown at 4% would be better, letting those who can afford a younger age use it, those who can't, not.

£10,000 is deliberately lower than much of the country might require because it's trying not to restrict those in low cost areas with low expenditure unnecessarily. It's still around £2,000 over the single person single tier payment so is presumably thought to be sufficient with some safety margin by those who set the single tier level above the means tested benefit level.

Rodney_Coffin

I am in receipt of an annuity paid in the sum of £17.10 PCM after tax has been paid. I am 68 years of age and have been drawing this since the age of 65. I would suspect that the cost of administration is equal to the sum paid!! Under the new rules can I now demand my "pot" to be paid to me?
Rodney Coffin

Linton

Rodney_Coffin wrote: »

I am in receipt of an annuity paid in the sum of £17.10 PCM after tax has been paid. I am 68 years of age and have been drawing this since the age of 65. I would suspect that the cost of administration is equal to the sum paid!! Under the new rules can I now demand my "pot" to be paid to me?
Rodney Coffin

Better if you had started a new thread.

Your pot has all gone in buying the annuity, it no longer exists.

dunstonh

Rodney_Coffin wrote: »

I am in receipt of an annuity paid in the sum of £17.10 PCM after tax has been paid. I am 68 years of age and have been drawing this since the age of 65. I would suspect that the cost of administration is equal to the sum paid!! Under the new rules can I now demand my "pot" to be paid to me?
Rodney Coffin

A pension is your pot of money you build up during your working life. However, when you bought the annuity, you paid for it with your pot. Your pot has gone. it does not exist any more.

There are no new rules that affect you.

bmm78

Rodney_Coffin wrote: »

I am in receipt of an annuity paid in the sum of £17.10 PCM after tax has been paid. I am 68 years of age and have been drawing this since the age of 65. I would suspect that the cost of administration is equal to the sum paid!! Under the new rules can I now demand my "pot" to be paid to me?
Rodney Coffin

As above, the pot no longer exists.

There is an ongoing consultation on whether people should be allowed to sell the income stream on annuities to a third party, which if agreed would come into force in April 2016. However, this is dependent on whoever is in power pushing through these changes.

Even if the new rules do come into force, you would not be able to "demand" the pot be returned - it would still be at the discretion of the annuity provider as to whether they allow you to sell the income stream.

It is actually possible for providers to unwind annuities currently, but this is purely at their discretion and it is very rare for this to happen. It is worth raising the question with your annuity provider to see if they are willing to do this, but the answer is very likely to be negative.

kidmugsy

Rodney_Coffin wrote: »

I am in receipt of an annuity paid in the sum of £17.10 PCM after tax has been paid. I am 68 years of age and have been drawing this since the age of 65. I would suspect that the cost of administration is equal to the sum paid!! Under the new rules can I now demand my "pot" to be paid to me?
Rodney Coffin

If you don't like it, why did you buy it?

jamesd

Rodney_Coffin wrote: »

I am in receipt of an annuity paid in the sum of £17.10 PCM after tax has been paid. I am 68 years of age and have been drawing this since the age of 65... Under the new rules can I now demand my "pot" to be paid to me?

Too late. You didn't need to buy an annuity three years ago.

If the consultation results in people being able to sell an annuity you might get back as much as half of the amount you spent to buy the annuity. Maybe a little more or less. This is because you have to pay for the profit for the buyer for the rest of your life plus some risk allowance for he chance of you dying early. If you have become less healthy since buying the price paid will be lower still.

There is still some small chance that you could increase your income by selling and deferring the state pension with the money. Depends on just how bad the price is but it's not going to be very likely.

Please make sure that all of your friends who are approaching retirement know that they don't need to buy an annuity and that if they want a guaranteed income, the best way to get it is almost certainly to defer the state pension and live on the pension pot while deferring, not buy an annuity. It still needs to be checked for each person but that's usually going to be the result for typical retirement ages and pension pot sizes.