Government access to pensions

nearlyrich

princeofpounds wrote: »

If I had been in charge, I would have done things differently, so that up to a certain minimum income it would have been been compulsory to buy an annuity or cap the annual drawdown. But anything over that minimum quite happy for people to do what they want with.

I am glad you are not in charge I don't want or need an annuity I have made a details plan of what I need and what I will have and I will not run out of money. I have other pots of money available until I get to 67 and my mortgage is paid off.

kidmugsy

It would be useful if a wider range of annuities were available (though Lord knows if even then people would buy them). For instance, deferred annuities on the American model: as you retire (say) at 65 you buy an annuity that will start to pay out at (say) 85. Of course it's cheap, because (i) you may not live to claim it, (ii) a fair chunk of your cohort will have died by age 85, and (iii) the money has twenty years to grow. So you can view that investment as having insured you against longevity, and treat the remainder as available to you for a known time-span viz 20 years.

Then when you are 85 and perhaps finding managing money a burden, (or perhaps when you've spent all of your remainder) your annuity kicks in.

Another one (that is available, I understand) is the fixed life annuity: you retire at (say) 60 and buy an annuity that lasts 7 years. It stops just as your State Retirement Pension kicks in. That way you can have assured yourself of an adequate income in the 60 - 67 gap without the hassle of managing the money or the risk of losing much of it.

dunstonh

It would be useful if a wider range of annuities were available

Prior to the pension freedoms, annuities were restricted in what they could do by legislation. The legislation restricting these was also changed as part of this process and there are now a number of new options available.


Problem is that the media have made annuity a dirty word. Multiple research has found that if you ask people to describe what they want in terms of an income product without naming products, they actually describe an annuity with death benefits.

Thrugelmir

brewerdave wrote: »

If annuity rates currently,were much higher then I'd agree that the new freedoms would be unecessary/potentially "disastrous"...but having looked at the relative monthly pittance that my 4 DC pensions would have given me, I'd much rather control the pot myself.

Are stock market returns that much better? Given the related volatility and risk. I wouldn't disagree that annuity products could be improved. Perhaps there'll be the next fad.

princeofpounds

Problem is that the media have made annuity a dirty word.

Indeed. Whilst annuity marketing over the years has been rather shameful in terms of guiding people towards the best value options, I think people are often in denial about the expected return available from investments at such low interest rates.

greenglide

so that up to a certain minimum income it would have been been compulsory to buy an annuity or cap the annual drawdown.

But before the "freedoms" came along we already had "capped drawdown" and "flexible drawdown". To be able to drawdown over the GAD limit you had to have over a prescribed amount of secure pension income.

Of course, the press and others ignored this or never knew / chose not to know.

Thrugelmir

princeofpounds wrote: »

I think people are often in denial about the expected return available from investments at such low interest rates.

Perception may well result in misjudgement. Interest rates are low for good reason. Risk is priced at a premium for good reason also. Chasing yield isn't a one way bet.

System

Will someone explain the thread title "Government access to pensions" ?