Posts Tagged ‘Retirement’

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

The Devil is in the Detail – Retirement Age Regulations Published

You’ll probably remember that we wrote in our blog recently about the removal of the Default Retirement Age from April. The post is here.

Just a short post today to keep you up to speed. As you know we aim to trawl through all the information slushing about online to bring you stuff that’s relevant, fresh and that we think you’ll find interesting. If you are not one of our clients we’re sure that your advisers will be doing the same for you, won’t they?

Those all round good eggs at DLA Piper LLP have issued an update on the new regulations that have been issued by the government regarding the removal of the Default Retirement Age. In the old days the ink would still have been wet it’s the information is so fresh!

You can click through to the article here. There’s some really good stuff in there on Group Insured Benefits and the Transitional Arrangements as well as an excellent summary under Implications. I must say that the stuff that DLA Piper issue is really good like that in giving a good clear summary.

The insured benefit stuff isn’t quite as we were led to believe. In the previous post we wondered whether the government would “walk the talk”. Well the good news is that it has – almost.

The exemption only applies to employees who are the older of 65 or State Pensionable Age. At the moment that’s not a problem as they are broadly the same – younger for women. The government are planning to move us all to a State Pensionable Age of 68 in the future. That means you could be looking at covering employees up to 68.

Employers will need to give some thought to whether they still want to provide benefits like life assurance, income protection and critical illness to employees over State Pensionable Age.

As if you didn’t have enough on your plate to think about!

Removing the Default Retirement Age– 4 things to worry about

We decided that we would take a break from writing about NEST and auto enrolment and focus instead on an issue that will one day affect us all – our retirement date.

The announcement today that the Government are pushing ahead with the removal of the Default Retirement Age has caught many people on the hop. If you feel inclined the Department for Business, Innovation and Skills (BIS) have published today the results of their consultation exercise. It makes interesting reading. To save you rooting around the web site here’s the link.

Knee Jerk?

It’s only three months away. Time is running outThat’s not a long time for employers, insurers and everyone else to consider what they need to do to comply with the new rules. Considering the forthcoming rules to automatically enrol employees in a pension scheme have taken years to get to the current Pensions Bill three months is a very short crash landing.

In our experience when anything like this is rushed into implementation by the legislators it normally ends up being bad news. A little too much knee jerk reaction.

Workplace Benefits – Left in limbo?

The rush to remove the DRA has left many employers in limbo about what to do about the benefits they offer their employees.

Many offer life assurance and income protection to employees. These benefits are insured with insurance companies.

Pensioner on Bench

Typically the insurers will only offer cover up to a maximum age – 75 usually. Clearly if an employee could in theory work into their 80’s the risk of death or long term illness grows massively. We’ve have clients who have had employees working into their mid-80’s even before these changes.

If the cost of these benefits starts to soar employers may simply remove them to avoid having to carry the risk for those employees that they could not get cover for. Serious concerns were raised in the consultation that without some form of clarity the removal of the DRA could have a negative impact on employees of all ages.

The good news is that in the consultation paper the government recognised this and they’ve said:

The Government recognises that there is a risk that employers may cease to offer insured benefits as a consequence of the removal of the DRA, and will therefore introduce an exception to the principle of equal treatment on the grounds of age for group risk insured benefits provided by employers.

The question is of course when and how will insurance companies react during the period when we are all in limbo. We have been in discussion with insurers about our own clients already and its really difficult to get any clarity.

Let’s keep our fingers cross that the government walk the talk – and soon – so we can all move forward with some clarity.

ACAS Guidance

The government are looking to ACAS to help employers with the compliance aspects of the change to the DRA.  They have issued a guidance booklet that you’ll find here.

In relation to the insured benefits we considered above the guidance booklet from ACAS states:

Some employers provide group risk insured benefits (including income
protection, sickness and accident insurance, as well as private medical
insurance) for their workers. These benefits will be exempt from the principle of equal treatment on the grounds of age so that it will remain possible for employers to cease to provide or offer these benefits once a worker has reached the age of 65 or the State Pension age for men, even if he or she decides to continue working beyond that age.

The age at which group risk insured benefits can be withdrawn will increase in line with increases to State Pension Age.

Far be it for mere mortals like us to question this but as far as I am aware I have yet to see any evidence of the exemption. The clock is ticking!

Bursting at the Seams?

Our worry about ACAS is that one if its other responsibilities is to mediate in employment disputes – including those that are due to be heard at an Employment Tribunal. With the huge amount of redundancies that have taken place in the current economic climate ACAS already have their hands full.

Last year there were 236,000 tribunal claims, up 50 per cent in a year – and nearly three times the number just five years ago.  It’s clear to us, and from the experience of our clients, that the resources of ACAS – certainly in this area – are stretched. With this extra responsibility – and a very short timeline – is it a step too far? Especially as like most bodies the funding ACAS receives is bound to be under close scrutiny.

One things sure from all this is that there’s some work to be done by employers and their advisers over the coming months. If you have any comments about the removal of the DRA and the points raised in this post we’d love to hear from you. Leave a comment below.