Posts Tagged ‘Annuities’

Delaying your annuity can be costly

Piles of Coins Flickr Images_of_MoneyDelaying buying your annuity with a pension pot could prove costly, warns the Daily Telegraph.

It’s true that annuity rates rise with age, so a 67-year-old in good health gets about 5% more income from an annuity than a 65-year-old. But if at age 65 you defer buying an annuity for two years, you would have to live to the age of 106 before the higher income you get at age 67 would make up for the two years’ worth of income you never had.

Converting your ‘pension pot’ into lifetime income is one of the trickiest decisions people face. It’s vital to get advice – there are many more options than you may think.

At 44 Financial Ltd we specialise in helping those that are at retirement choose the right product and maximise the income they receive. We can ensure that you get the best rate by shopping around on your behalf.

If you need any help please call us on 0116 380 0133.

Steve Clark

Image courtesy of Flickr – Images of Money

A gender for change

You may remember that we wrote about the European legal case that was on the horizon that could have a massive impact on the pensions and financial services industry. Well today is the day and the European Court of Justice has published it’s decision. You can read the full press release here.

From December 2012 unisex rates must be used when looking at premiums and benefits. What does this mean?

Is it just Sheila’s Wheels?

Daily Telegraph Front Page Tu Foto con el PresidenteIf you have listened to the TV or radio or read the newspapers they are very much concentrating on the impact that same sex rates will have on car insurance rates. Here’s a good example from the BBC.

However, this judgement will go well beyond car insurance. It’s not just younger women drivers who will suffer the cost of the European unisex quest.

In fact the use of separate male and female rates stretches across the financial services industry.

Buying a Pension

One major impact will be in the rates that you can get when you come to use your pension pot to buy a pension at retirement. As women statistically live longer than men up until now for the same pot of money on the same basis at the same age a man will get more income. This was to reflect the fact that on average the man would be drawing his pension for less time.

From no later than December 2012 the rates will have to be the same. That’s going to create a bit of turmoil in the pension market over the next couple of years. It will also mean that those who are thinking about using their pension pot to buy a pension soon will need to get some advice regarding the timing of that decision.Pensioner on Bench debsbyrnephotos

From a pension scheme perspective the Financial Times have published an article commenting on the impact for company pension schemes that use annuities to provide income when a member retires.

One way or another if you are an employer with a pension scheme of any description you are going to have to sit down and look at the implications for your scheme. Even if you have a Stakeholder or Personal Pension Plan you may wish to alert members who may be considering taking benefits about this change.

Life Assurance, Income Protection & Critical Illness

These benefits – whether you take them out yourself or offer them through a company scheme – take into account gender differences. The different genders have statistically different claims histories and typical conditions. For life assurance for example it’s cheaper to insure a woman due to the longer life expectancy. In other words at nay age it’s less likely that a woman will die than a man of the same age if both are in good health.

We’re likely to see a change in the cost of these benefits as unisex rates start to be used. If you are looking at any personal cover it will be worth getting advice regarding whether it is wise to do this before December 2012  – particularly if you are a woman.

The Need for Advice

It’s clear that the impact of this judgement will be felt by far more than younger women drivers who may have to pay higher premiums. It will have a wide ranging impact for most individuals and their employers.

This will be a good test for how good your current adviser is. Firstly, to see how long they take to tell you about this and, secondly, how quickly they come up with a strategy for you!

Over time the financial services industry will work out how it intends to comply with the judgement. As we say all too often on this blog……watch this space!