In March 2015 the Government announced plans to create a second-hand annuity market and allow people, who had previously bought annuities, to sell them for cash, from April 2017. At the start of this month they decided to cancel those plans.
The good news is, according to their research, the vast majority of people currently holding annuities have the correct solution already. Only around 5% of annuitants might be better off selling their contracts. Furthermore, on speaking to product providers, the industry regulator and consumer bodies, the Government was convinced that a competitive market could not be created. As a result, those consumers willing to sell would have been at risk of getting a pretty poor deal.
The bad news? There are still many people with pension plans established before 2015 which will not allow them, or their families, to benefit from the many freedoms now available. So we could be looking once more at the situation of people buying the wrong product again, and again!
There are important questions here that need to be asked: does your pension plan provide a number of ways you can take benefits? Will you only be offered annuity purchase at retirement? Do you know who will inherit your pension funds? Does your pension allow a variety of options for them if you die?
Proper financial planning is the key to getting the correct solution for your individual needs. It is essential that you have a trusted adviser who will listen to, and understand, how you and your family want to live life, get the foundations in place, then help you evolve your own plan. It has to be a two way process of honesty and education so your strategy is robust, realistic, flexible, secure and, above all, you completely understand how it works. That way, whatever your future holds, you and your loved ones won’t be left trying to choose from a narrow range of options at the last minute.
Carbon’s friendly and highly qualified team would be delighted to help you plan for, or in, retirement. Don’t leave it all to chance. Please call our Edinburgh office on 0131 220 0000.