New state pension

kidmugsy

Some people may want to sell an annuity to let them clear expensive debt. That seems a pretty reasonable policy to me.

But of course many people will simply want to blew the lot and then freeload on the taxpayer. The welfare state is designed to encourage that - not the original welfare state, but the one we have now, following the postwar reforms.

Archergirl

Not agreeing with it but it isn't right that you work and save all your life and are worse off than people who don't ......

greenglide

But of course many people will simply want to blew the lot and then freeload on the taxpayer. The welfare state is designed to encourage that - not the original welfare state, but the one we have now, following the postwar reforms.

Is it actually "designed" at all? Surely it is a hotch potch of mostly well meaning changes which have, by and large, not been thought out totally end to end so there is always some group (large or small) who are disadvantaged or left in a position whereby to earn more leaves them worse off?

The recent pension changes (I cannot bring myself to call them "reforms") are yet another example of lots of tinkering and changes for change sake, without addressing the core issues or even agreeing what the true problems are that need fixing.

Will making it easier to get your hands on your pension funds as a lump sum and even undoing annuities help at all? I think not. Most of these people who can now "access their hard earned savings" contributed to pensions schemes to ostensibly provide an income in retirement (most will have been contributed before drawdown existed at all) and so didnt expect to get all the money back anyway until the politicians started tinkering.

Any changes that are not broadly supported across the political spectrum are liable to be "a bad thing". Pensions should not be a clever investment product to give the best return - they should be a means to provide income over many years of retirement. The question is "how"?

greenglide

Not agreeing with it but it isn't right that you work and save all your life and are worse off than people who don't ......

All other things being equal then "yes".

But things are never all equal. In most cases people who "work and save all your life" are significantly better off than those that didnt, but not quite always.

Archergirl

Yes, my niece and her boyfriend are trying so hard to save for a house deposit, boyfriend's sister has a baby and gets given a council flat.....but that's another thread........

seven-day-weekend

How does the cashing in of an annuity work, if it has already been paying out for (say) ten years?

greenglide

seven-day-weekend wrote: »

How does the cashing in of an annuity work, if it has already been paying out for (say) ten years?

At the moment it doesnt. The Government seems about to set up consultation over it.

At present is appears to be a plan to allow people to sell the annuity income stream to a third part financial institution in exchange for a, presumably taxable, lump sum.

The older you are the logically less the income stream would be worth. The purchaser would expect to make a profit, presumably the purchase price being offered would be small?

Basically it is madness in most cases. Logically people who really, really wanted to get the money out (in bad health) would get the least.

dunstonh

I wonder how many people with annuity rates around 9-15% a year will try this and get a lump sum they put in the bank earning 1-2% a year.

atush

But, there is a new policy going on about Annuities being miss sold if there were ill health issues and the insurer did not ask about it before offering an annuity.

So someone who is and was in ill health, who bought an annuity direct and did not engage an IFA, and therefore would not be able to sell an annuity at a good (or any) price then there could possibly be a case of miss selling.

I have no idea how this is all going to work, but assume it will be via a complaints process.

Lots of people with small pots who came up to retirement got letters of annuity offers from their pension provider. Then did not hire an IFA nor try the open market nor mention health problems and just took up the offer.

Archergirl

Gonna be another scandal and unhappy people.
We are both final salery so didnt need to go that route.