New Pension Laws?

Lady_Python

I am in receipt of two small pensions my late husband left me. He died 4 years ago. Total of pensions combined, a measly £160 a month.

I would love to offload these and find a better investment as I feel I could get a better return elsewhere. I'm lucky if these go up by 0.5% a year (one is Standard Life, the other Aviva).

I believe the rules have been changed as of next year for those of us stuck with these types of pensions in the last budget. Does anyone have any information please?

kidmugsy

Lady_Python wrote: »

I am in receipt of two small pensions my late husband left me. He died 4 years ago. Total of pensions combined, a measly £160 a month.

It sounds as if these are annuities. If so, there's nothing to be done. When did your husband start them?

jamesd

There are currently no rules allowing this but there is a consultation into allowing selling of annuities. It may be possible in a year or two.

However, this is assuming that these are annuities and you wrote about them increasing by 0.5% a year. Is that an investment growth or is it the inflation-linked increases that an inflation-linked annuity would make? If so, the increase will be higher in high inflation years and lower in low inflation years.

Lady_Python

Late husband took a modest lump sum out of one in 2004 and the pension (Aviva) started then. He did the same with the Standard Life one in, I think it was 2009. He died in 2011.

I think they are investment linked and not inflation linked but when it comes to this type of thing, I'm as thick as two short planks! Could probably do with showing them to a good financial advisor.

I did think that those of us with existing annuity pensions could offload them as of next year due to the fact that the government recognised most of us are getting a poor return (high hidden fees etc.).

Maybe I've got the wrong end of the stick.

dunstonh

I did think that those of us with existing annuity pensions could offload them as of next year due to the fact that the government recognised most of us are getting a poor return (high hidden fees etc.).

The Govt has not recognised most are getting a poor return. That was not what the changes were about.

The Conservatives have said they will put in place a consultation if they get elected to allow people to trade their annuities. However, most feel that it would not be financially sensible for most people as the terms are unlikely to be attractive.

kidmugsy

dunstonh wrote: »

most feel that it would not be financially sensible for most people as the terms are unlikely to be attractive.

Mr Osborne said the same thing: he thought that it would not make sense to sell most annuities.

jamesd

Lady_Python wrote: »

I think they are investment linked and not inflation linked but when it comes to this type of thing, I'm as thick as two short planks! Could probably do with showing them to a good financial advisor.

It's worth asking what they are, since that does greatly affect your options. They probably are inflation-linked annuities because drawdown wouldn't increase with inflation but maybe you have something else.

jamesd

kidmugsy wrote: »

Mr Osborne said the same thing: he thought that it would not make sense to sell most annuities.

He's probably right. Early in retirement it might, barely, be possible to get ahead by selling then using the money to fund deferring the state pension.

But in general health gets worse as people get older. that means that the payout is likely to drop also because it's linked to life expectancy. And it doesn't seem likely that enhanced annuities would pay enough to compensate for that. The same issue prevents things like selling a standard annuity to buy an immediate needs annuity because the need would cut the payment. So many of the potential ways to gain are health-related things that would cut the payout.

kidmugsy

Lady_Python wrote: »

Late husband took a modest lump sum out of one in 2004 and the pension (Aviva) started then. He did the same with the Standard Life one in, I think it was 2009. He died in 2011.


I did think that those of us with existing annuity pensions could offload them as of next year due to the fact that the government recognised most of us are getting a poor return (high hidden fees etc.).

Maybe I've got the wrong end of the stick.

The annuities ought to have been much better value than current ones offer, having been bought years ago. You'd probably get far less than a couple of thousand a year for the money today. I'll tell my wife that you think a couple of thousand a year is "measly"; that's about what she gets from her occupational pension.

What "hidden fees"?

Anyway, are you going to tell us a bit more? If not, there's not much help anyone can give.

Lady_Python

kidmugsy wrote: »

The annuities ought to have been much better value than current ones offer, having been bought years ago. You'd probably get far less than a couple of thousand a year for the money today. I'll tell my wife that you think a couple of thousand a year is "measly"; that's about what she gets from her occupational pension.

What "hidden fees"?

Anyway, are you going to tell us a bit more? If not, there's not much help anyone can give.

All of these insurance companies take off "hidden fees". How they do that, I do not know but they don't lose any money with pensions (or anything else). I have read the document but really couldn't make head nor tail of it - written in gobblygook.

What I do know is when my husband went with Aviva, the financial advisor he had pushed Aviva as having the highest return at the time. Aviva were subsequently fined for misleading people on their returns (Google it) a few years ago.

That, really is all I can tell at the moment.



I always thought if he'd shopped around a bit he could have got a better deal but he had been very, very ill at the time (survived a heart attack the docs call a widowmaker) and wanted some financial backup. As it was, he lived a normal life for another 7 years before having another, ultimately fatal heart attack.

Thrugelmir

Lady_Python wrote: »

I do not know but they don't lose any money with pensions (or anything else).

If that was the case then they wouldn't be required to maintain high levels of capital to maintain regulatory requirements for solvency. Some of us remember Equitable Life only too well. As to what can go wrong.