If Pension Freedom Had Never Happened?

westv

Thrugelmir wrote: »

Everything happens for a reason.;)

What data are you comparing to assess going "south"? I assume rates must be now extremely low.

The last time I lookeď a few days ago they didn't look too far off their 2016 low point.
Anyway, the question wasn't about annuities but it was brought to my mind because of annuities.

Thrugelmir

westv wrote: »

The last time I lookeď a few days ago they didn't look too far off their 2016 low point.
Anyway, the question wasn't about annuities but it was brought to my mind because of annuities.

30 year gilts have hit an all time low of around 1%. There'll be no respite soon for annuity rates.

jamesd

westv wrote: »

I noticed today that annuity rates appear to have gone south again recently. It got me wondering as to where we all might be now in our plans if the 2015 changes had never ocçured.

I'd have made lower pension contributions because the GAD limit on capped drawdown prevented those retiring early from drawing pension money fast enough to get a level income throughout retirement. I'd be significantly less well off financially as a result. Capped drawdown had caused me to increase them beyond what they would have been in an annuity-only world.

I was one of the respondents to the survey cited when the flexibilities were introduced to Parliament. I'd explained the effect of the GAD limit and explained that not forcing me to use non-pension investing to get a level income throughout retirement was what was needed to get me to make higher pension contributions. The result was far better than I'd hoped.

Today we can use the freedoms to make properly research based drawdown decisions based on our own circumstances and preferences. Which can and often should include some buying of guaranteed income via state pension deferral and eventually annuity buying.

On the negative side, once people finally realised that annuities were't compulsory - having first been made optional back in 2006 with Alternatively Secured Pensions - sales have dropped greatly and competition has reduced.

GunJack

Silvertabby wrote: »

When the freedoms were announced, there were many comments on these and other financial boards from people who intended to live the high life from age 55 or so, then latch on to the public purse in retirement.

It's too early to say if their plans will work. I know DWP issued a 'deprivation of pension assets' leaflet, which stated that those who squandered their pension pots will still be assumed to have the money when applying for means tested State benefits - but I don't know how that will work in practice.

I would think that this has the potential to severely duff a lot of people's plans....not so much people who frequent these boards, but there's an awful lot of uninformed/misinformed people out there.....

As for me, whether the freedoms happened or not, I'm in exactly the same situation as before - 20 yrs PCSPS plus 12 yrs and countng in company DB(CARE) scheme, plus 18-19 gave me last year of NI for max newSP

crv1963

westv wrote: »

I noticed today that annuity rates appear to have gone south again recently. It got me wondering as to where we all might be now in our plans if the 2015 changes had never ocçured.

Had the reforms not been made for us in our circumstances it would have meant we did not make any contributions to my wifes pension above the minimum required. As it is they have allowed us to contribute more and plan to draw down up to the personal allowance when we finally retire.

I have several friends who are in a similar situation- drawing down at a higher rate in early retirement with plans to reduce this once their SP starts, or delaying taking SP if they find that they do not need it at SPA.

We've planned and are paying into several different "pots" each with an earmarked purpose at different stages of retirement. Some will be drawn to zero, some left alone in case they are needed in very old age (if we get there) and some to provide a steady rate of draw down.

We are not talking of very high earners, wife BR taxpayer, I sometimes hit HR but am usually BR taxpayer most years unless I push myself with overtime, which to be honest as I approach retirement I'm less inclined to work more and more hours. Generally my overtime goes towards financing preparing the house/ garden for our retirement.

Keith_Clunk

westv wrote: »

If Pension Freedom Had Never Happened?

Less IFA's driving expensive cars with less rubbing together of their hands without the prospect of compulsory use of their services for 'old people' incapable of making their own pension decisions.

Besides the above, it was a very welcome change for the 55 and overs.

Malthusian

pensionpawn wrote: »

I for one will happily kiss Osborne's bot for the pension reforms. I was getting seriously depressed by my annuity forecasts even though they were based on a reasonable six figure pot.

*bang* *splutter*

Every time someone talks as if George Osborne invented income drawdown (introduced in 1995), God makes a Lamborghini's engine explode. Please don't blow up Lamborghinis.

Silvertabby wrote: »

It's too early to say if their plans will work. I know DWP issued a 'deprivation of pension assets' leaflet, which stated that those who squandered their pension pots will still be assumed to have the money when applying for means tested State benefits - but I don't know how that will work in practice.

A lot of them won't be eligible for any means tested benefits whether they blow their pension or not.

The rest will get means tested benefits. The Government isn't going to make people starve on the streets because they spent their pension on a cruise.

The main risk with income drawdown is not people blowing the fund, but people not spending it because they're afraid of running out.

Thrugelmir

Malthusian wrote: »

The main risk with income drawdown is not people blowing the fund, but people not spending it because they're afraid of running out.

Depends on the nature of the individual concerned.

Drawdown won't have fulfilled it's objective if people have to cut their spending either to meet their objectives.

Malthusian

Thrugelmir wrote: »

Depends on the nature of the individual concerned.

True. But over a population, more indivduals hoard their money for fear of running out than spunk it up the wall.

Drawdown won't have fulfilled it's objective if people have to cut their spending either to meet their objectives.

For some people spunking it up the wall is their objective. YOLO. Live for today. Carpe rotam. Not how I would want to live my life but the great thing about freedom is that I don't have to.

The objective of drawdown / pension freedom is to give people the choice, not make everyone better off.

JoeEngland

westv wrote: »

I noticed today that annuity rates appear to have gone south again recently. It got me wondering as to where we all might be now in our plans if the 2015 changes had never ocçured.

I would have been up s**t creek without enough bog roll. Even waiting till 60 probably wouldn't have given me a decent annuity. The flexibility to manage our own money is a godsend since I had to give up full-time work at 53. Without pension freedoms I would probably have to find part-time work and burn up all or most of our savings until I could get a sufficient size annuity.