20 August 2013 1. A single life level annuity guarantees that your pension fund will not ‘run out of money’ and the income you receive from your pension fund will be fixed now for the rest of your life. You know what you will get each year. 2. It guarantees that you will never get a higher income than this even if annuity rates rise in future. 3. It guarantees that your income has no protection against inflation, so your…
August 18, 2013 at 7:27 pm I have just read a blog which once again suggests that those who save cannot expect returns because times are tough and everyone should expect to do badly at the moment. The blog discusses its views on ‘Why @SaveourSavers are doomed’. You can read it here: http://leftoutside.wordpress.com/2013/08/18/why-saveoursavers-are-doomed/ This is my response: Demands for higher interest rates are not necessarily demands for transfers from people in the future to people in the present. Indeed demands…
I have been engaged in a lengthy twitter engagement with @IzaKaminska and we have agreed to disagree. Her first post on our debate was entitled ‘Savers are not sacred cows’ and can be found here http://dizzynomics.wordpress.com/2013/08/12/savers-are-not-sacred-cows-redux/. I feel her arguments and those of others with similar views, are important to air. I fundamentally disagree with their analysis, but I may of course be wrong. They contend that we are actually in a deflation and there is not really any inflation…
13 August 2013 There is no control on annuity pricing, profits or risk margins People buying without an adviser at risk of poorest rates but don’t realise Insurers may be pocketing £100m each year from selling poorest value products As we move towards a world of defined contribution pensions, more and more people will be reaching retirement and having to find the best way to release money from their pension savings. If we want auto-enrolment to work well, we need…
The annuity you will be offered as standard by most pension companies will be a single life level annuity. It usually offers the highest starting income (although if you have some health conditions you could get more with a different type) but this kind of annuity has many drawbacks which you may not understand. Therefore, it is vital to think carefully before buying an annuity. The best thing you can do is to get independent financial advice to help you…
12 August 2013 Buying an annuity is a gamble which can lose all your money – the income is ‘safe’, but your capital isn’t! Regulators not ensuring consumers understand the risks of annuities Defined contribution pension trustees must do more to look after retirees – explain benefits of ‘do nothing’ option for small pots Annuity purchase is a big gamble: Buying a standard annuity in your 60s, which is a relatively young age, is gambling on you staying fit and…
8 August 2013 DWP delighted auto enrolment opt-outs much lower than expected Treasury will have to budget for higher than expected tax relief! Encouraging progress in improving private pension coverage, but far more is needed – including annuity reform Auto-enrolment among largest firms has been successful in ensuring more people save in a pension: The DWP has released figures today showing that nine out of ten workers automatically enrolled into their employer’s pension scheme have decided to stay in. It…
7 August 2013 Three more years of misery for savers and pensioners Rates remaining at emergency levels whilst there is no emergency Relying on borrowing and house price inflation to drive growth is how we got into the crisis Anyone approaching retirement and potentially buying an annuity, anyone running a pension scheme and anyone saving for their future will have been disappointed by today’s masterly statement from Mark Carney, potentially promising three more years of emergency, ultra-low, interest rates. The…
7 August 2013 Here is my latest piece, looking at the recent figures on UK pension deficits. Firms are still struggling with the effects of QE and continued low interest rates, plus above target inflation. I hope that Mr. Carney will not overlook these negative effects of low rates, although I fear it is not an issue he will take seriously. Do give me your thoughts. Comment below. FTSE 100 pension deficits still rising despite strong markets and higher employer…
I’m doing quite a bit of work on annuities at the moment and just thought you might be interested in seeing some of my conclusions. The current annuity reform agenda benefits the brokers and providers, not the poorly-informed consumers. I’m particularly worried about future widows left with nothing because their husbands did not realise the implications of annuities. What do you think? Do leave a comment below. 250,000 widows or widowers at risk in annuity market each year Annuity buyers…