Annuity changes likely to affect a minority

Industry experts have suggested that the recent changes to annuities brought in by the coalition government will not have a great effect on the majority of retirees. According to this recent article from the Sunday Express, this majority are unlikely to benefit greatly, although they are able to enjoy greater flexibility as a result of the legislative amendments.
“Plans to scrap the requirement for all savers to swap their pension pot for an annuity, which turn funds into a guaranteed income for life, will only benefit a small proportion, say experts.
Present rules state those with a personal or company money purchase pension must buy an annuity once they reach 75.
However, the Government said this rule would be abolished and last week gave more details of how it is planning to make the changes from next April.
Tim Whiting at The Annuity Bureau, said: “Overall, the impact will be modest and only likely to benefit those with large funds. The vast majority of people will still need to access income as soon as they finish working and so the option of deferring their annuity will simply not be viable.
“The average retirement fund is less than £30,000 and at that value, flexibility really is not an option. However, any increased flexibility for people approaching retirement is very welcome.”
Recent research shows that 60 per cent of people sign up for the annuity offered by their pension fund provider, even though it is unlikely to be the best on offer across all UK pension firms.
Savers are encouraged to shop around for the best annuity rate with the help of an independent financial adviser.”
Simply call, write or use the online service and we’ll introduce you, in various ways, including through the website and by phone, to Independent Financial Advisers (IFA).
See the full article PENSION RULE CHANGE TO AUNUITY AIDS FEW – EXPERTS