Money Mail Campaign 'Unlock Our Pensions'

[HandySparks]

Doesn't help people like tels wife. Give her back the remainder of her pot, less any monthly payments she's received.

Quite agree that this would be the best option here. However that was never on the table, only a separate deal offering a (likely low) lump sum in exchange for the annuity income.

 

[Midwest]

Quite agree that this would be the best option here. However that was never on the table, only a separate deal offering a (likely low) lump sum in exchange for the annuity income.

They had the choice then, but not now it seems. The lady In the piece has a monthly pension of £59, from a lump sum of £14000. She will have to reach her 81st birthday to break even. In the meantime, the insurance company, will make an investment on her pot.
It would have been done to the individuals to make the choice. This is not about people squandering their pensions, but make an alternate use of a poorly funded or mis-sold investment.

 

[HandySparks]

They had the choice then, but not now it seems. The lady In the piece has a monthly pension of £59, from a lump sum of £14000. She will have to reach her 81st birthday to break even. In the meantime, the insurance company, will make an investment on her pot.

This is an annuity rate of 5%, which is in the right ballpark. The insurance company will invest the money, but since they have guaranteed her £59 a month for life, they will probably have invested in lower risk (and therefore lower return) investments. They could be paying out for another 20 years after she's 'broken even'. That's their risk and is why an annuity can seem poor value for money.

The real problems are the rising life expectancy, which hasn't been properly addressed by governments until relatively recently, plus the generally poor financial education, which means that most people don't realise how much a decent pension really costs.

Maybe people should still have the choice to 'sell' their annuities, but in practice, no one would have found an acceptable deal.

 

[Midwest]

The only acceptable part in this, is these insurance companies would of had to put aside a large some of money to pay back these annuities (like Barclays having to put aside 1 billion £ for PPI), so they went crying to the Government.

In the example, receiving £59 a month as a pension, compared the new state pension of £155 a week, just how worthless some of these pensions are. Again in this example, the lady was going to put her pot towards getting a car, so she could visit her elderly parents. Until you're are locked into these worthless pensions, you cannot understand how frustrating and in this case, distressing they are.