Ten months after the introduction of the Retail Distribution Review
(RDR), and we are beginning to get the hard facts behind how the annuity
market has changed, and how people are buying annuities through
different channels.
The percentage of money coming through the advised segment of the
market has been slashed from 61% last year to 37% for the first six
months of this year. Instead more and more people are going through the
non-advised route; up to 52% from 32% last year.
The rise in non-advised is partly because there are more annuity
desks to choose from. Household names have recently launched offerings,
and a lot of time and effort has been invested in these services.
To read more, follow this link
Tuesday, 19 November 2013
Friday, 15 November 2013
Why Pica's new directory matters
More value is lost from the pension system at the point of retirement than at any other stage of the retirement saving journey.
For years, investors have been buying poor value and inappropriate annuities. This is because they have not enjoyed the benefit of having an intermediary help them to shop around the market and find competitive terms for them.
For years, investors have been buying poor value and inappropriate annuities. This is because they have not enjoyed the benefit of having an intermediary help them to shop around the market and find competitive terms for them.
There is an additional problem though in that many pension pots are very small, half are worth less than £20,000 at the point of annuitisation, whilst nearly 30 per cent are worth less than £10,000. For these smaller pension pots in particular, it can be a problem for investors to find an intermediary who can help them.
This is where the Pica (Pension Income Choice Association) directory comes in. The directory is free for intermediaries to register with, it is free for consumers to use, it carries no advertising or click through costs. It is a not-for-profit initiative to bring together industry solutions with consumer demand.
Source: MoneyMarketing, Tom McPhail
Monday, 4 November 2013
The dangers of pension liberation
Source: Money Market
You can’t touch your company or personal pension until age 55, but some rogue advisers have been promoting a way of getting at your money before then, called ‘pensions liberation’. This can seem an attractive option for people with severe money problems, but hefty charges and tax penalties could end up wiping out all of your pension pot.
Under pensions liberation, an unregulated adviser will typically take control of your entire pension, convert it into a bond, then lend half the money back to you as cash. You will have to pay both the loan and interest in full before you retire. The adviser may call it a ‘pension loan’, falsely claiming you are only ‘borrowing’ the money in your pot.
City regulator the Financial Conduct Authority has warned that any scheme offering to help you release cash from your pension before age 55 “is almost certainly a scam”.
It may sound attractive to people in financial hardship, but the huge charges and potential tax penalties can wipe out your entire fund, says Andrew Tully at retirement specialists MGM Advantage. “The companies behind these typically charge huge fees, between 20% and 50% of your pension fund’s value. Even worse, if HM Revenue & Customs find out you have taken out one of these unauthorised schemes, they could hit you with a tax penalty of up to 70% of your money.”
To read the full article, please follow this link.
If you have money worries and a huge pension pot sitting in a bank account, releasing it is tempting; this is bad news
Seems an attractive option for people with cash worries; there are big charges
If you have money worries or unpaid debts it can be frustrating to have a lot of money tied up in your pension, but think twice before trying to unlock the cash.
You can’t touch your company or personal pension until age 55, but some rogue advisers have been promoting a way of getting at your money before then, called ‘pensions liberation’. This can seem an attractive option for people with severe money problems, but hefty charges and tax penalties could end up wiping out all of your pension pot.
Under pensions liberation, an unregulated adviser will typically take control of your entire pension, convert it into a bond, then lend half the money back to you as cash. You will have to pay both the loan and interest in full before you retire. The adviser may call it a ‘pension loan’, falsely claiming you are only ‘borrowing’ the money in your pot.
City regulator the Financial Conduct Authority has warned that any scheme offering to help you release cash from your pension before age 55 “is almost certainly a scam”.
It may sound attractive to people in financial hardship, but the huge charges and potential tax penalties can wipe out your entire fund, says Andrew Tully at retirement specialists MGM Advantage. “The companies behind these typically charge huge fees, between 20% and 50% of your pension fund’s value. Even worse, if HM Revenue & Customs find out you have taken out one of these unauthorised schemes, they could hit you with a tax penalty of up to 70% of your money.”
To read the full article, please follow this link.
Thursday, 31 October 2013
It pays to take a risk in retirement
Source: The Sunday Times
With rates so poor, experts advise looking for alternatives at retirement.
Few people would think about fixing their mortgages for two decades, but most of us still lock our retirement income into a fix for 20-plus years — even though the rates available offer appalling value for money.
Pension experts say it is now time for a radical rethink of how we fund retirement.
Annuity rates have been creeping up, rising 6% over the past three months and 12% since the start of the year. They are now at their highest level since 2011.
However, the payouts remain extremely poor. Someone retiring at 65 with a £100,000 pension fund can secure an income of just £6,252 a year, according to Hargreaves Lansdown, with some annuity providers paying far less. This will not increase with inflation, nor will it pay a pension to any surviving spouse.
Monday, 28 October 2013
Government asked to inflation link overseas pensions
Source: Every Investor
MGM Advantage has called on the government to review the policy denying thousands of people inflation-linked rises in their state pension when they choose to retire abroad.
MGM Advantage has called on the government to review the policy denying thousands of people inflation-linked rises in their state pension when they choose to retire abroad.
Where a country does not have a reciprocal agreement with the UK, including some of the most popular retirement hotspots, UK pensions are frozen at the point of retirement.
Australia, Canada, New Zealand and South Africa all currently fall outside the reciprocal arrangements with the UK but are popular with expats.
“Retiring abroad is an aspiration for many people, with our research showing three of the most popular foreign retirement destinations do not currently have reciprocal agreements in place,” said Andrew Tully, pensions technical director at MGM Advantage.
“We need to ensure a level playing field for anyone retiring abroad, irrespective of their chosen destination. People who have been caught out by finding their UK state pension frozen at the point of retirement understandably feel hard done by.
“For example, if you retired to Canada ten years ago, your UK state pension would now be worth 42% less than if you had retired across the border in the US. Many retirees have found this has hit them hard.”
Thursday, 17 October 2013
Annuity rates recover to two-year high in Q3
Pension payout rates have soared to a two-year high – bringing a welcome boost to millions of workers planning for retirement.
Figures yesterday revealed that people buying an annuity now will get 11 per cent more than this time last year.
Pensions have been squeezed by falling investments, a record low base rate of 0.5 per cent and the Bank of England’s money printing programme, which has pushed down the price of Government bonds and damaged annuity rates.
In November 1991 average rates were over 14 per cent. Today they are around 5.8 per cent.
The MGM Advantage Annuity Index showed rates increasing by six per cent in the third-quarter of the year, the largest quarterly increase since August 2009.
Follow this link to read the full article in Daily Express
Friday, 4 October 2013
Gender equality rules means women can get 12 per cent more retirement income from annuities than last year
By Adam Uren, The Mail Online
Women buying an annuity can get a retirement income 12 per cent higher now than before 'gender neutral' pricing was introduced just under a year ago.
Annuity rates have been on the rise since the turn of the year as a result of improved investment returns on the bonds and gilts that underpin them, but it is women who have benefited most thanks to EU rules introduced last December.
These gender equality rules meant insurance companies are not allowed to discriminate because of sex when offering to convert pensions into annuity incomes.
But once the EU rules were brought in this could no longer be taken into account, meaning women's rates rose and men's fell as the prices equalised.
To read the full article from Mail Online, please click here
Women buying an annuity can get a retirement income 12 per cent higher now than before 'gender neutral' pricing was introduced just under a year ago.
Annuity rates have been on the rise since the turn of the year as a result of improved investment returns on the bonds and gilts that underpin them, but it is women who have benefited most thanks to EU rules introduced last December.
These gender equality rules meant insurance companies are not allowed to discriminate because of sex when offering to convert pensions into annuity incomes.
But once the EU rules were brought in this could no longer be taken into account, meaning women's rates rose and men's fell as the prices equalised.
To read the full article from Mail Online, please click here
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