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racedo
20th Mar 2014, 22:19
HM Govt announced changes in Budget whereby pension savers will be able to take out their pension savings and do what they like with it..................of course Govt will recover tax from it.

I have a feeling that this is walking to disaster as scam artists quickly come in to remove any money people save.

Views ?

Shaggy Sheep Driver
20th Mar 2014, 22:24
A bit like the scam artists who currently sell hugely overpriced annuities to the poor suckers in the captive market who have little choice but to buy them when their pension pot matures?

I'd rather people have the choice to invest or spend their pension pot on the open market, not captive to these annuity sharks. At least then if they are savvy they can avoid scams. At the moment, they are a captive market for annuity scammers. The only choice at present is to choose the date you let the annuity scammers bend you over and have their way.

It's well overdue that this legalised robbery was stopped!

Groundbased
20th Mar 2014, 23:12
I'm not sure many people realise how little a small-mid pension pot generates in income when you have to buy an annuity. A 100k pot generates under 6k a year in income. Unfortunately the average pot in the uk is about 35k so most people would be looking at an income of about 2k per year when forced to annuitise.

If they took the 100k and invested it in other products they would likely get a better return.

The change doesn't solve the problem of most people not saving enough for retirement but does give more flexibility for those with pots where they could do something with that beats annuity rates.

G-CPTN
20th Mar 2014, 23:33
A further fact is the arrangement fees (or commission) charged by the facilitators.

Of course that is how they derive their living.

I have declined to 'invest' in portfolios as they want a slice of my money before the remainder gets invested.
Am I being unreasonable?

awblain
20th Mar 2014, 23:47
To be fair to annuity sellers, if you take the money, could you do as well as 6% if you make it to 95?

You could take up smoking?

Krystal n chips
21st Mar 2014, 05:39
Oh dear !

Don't tell me, let me guess " my remarks were taken out of context " / "my remarks were tongue in cheek ", etc, and every other politicians excuses..... from the list of thousands.

Pension pots 'can be used to buy Lamborghinis', says minister | Money | The Guardian (http://www.theguardian.com/money/2014/mar/20/pension-pots-used-lamborghinis-minister)

I do like the bit about those who may indeed spend the lot, being subsequently able to simply fall back on the State pension.....the unintended irony being that those who could possibly afford this largesse, are, invariably, those who detest anything to do with the State and the Public sector.

"Yes Minister "......no need for a series really, when there's more than enough evidence that life does indeed imitate art.

Groundbased
21st Mar 2014, 06:26
I think the point is that most people will fall back on the state sector anyway because the pension pots they have saved will not produce anything like a living income.

Not helped of course by the "largesse" that Gordon brown stripped from private sector pension pots when he was chancellor.

Public sector pensions don't seem to be affected in quite the same way.

John Hill
21st Mar 2014, 06:31
I would be very happy if I could buy an annuity that would pay 6% per annum.

UniFoxOs
21st Mar 2014, 07:48
I do like the bit about those who may indeed spend the lot, being subsequently able to simply fall back on the State pension.....the unintended irony being that those who could possibly afford this largesse, are, invariably, those who detest anything to do with the State and the Public sector.

And those forced into a pension they didn't want to pay for because they were the improvident "live for today, forget about tomorrow" types - will they invest 100K in a pension when they retire? Or will they blow it all and rely on state handouts?

Choxolate
21st Mar 2014, 08:21
HM Govt announced changes in Budget whereby pension savers will be able to take out their pension savings and do what they like with it..................of course Govt will recover tax from it.

I have a feeling that this is walking to disaster as scam artists quickly come in to remove any money people save.

Views ? Absolutely excellent news, I have just reached "offical" retirment age of 65 but am still working part-time and have been one of the savers of this world and have built up a reasonable pension pot.

I am now free to control MY OWN MONEY that I have earned and will pay tax on when I withdraw it from the pension pot.

The usual naysayers complain that people will take it all out and blow it on holidays, cars etc.

FFS - it has taken me my whole life to save enough to live on when I can no longer work - and I am going to waste it all away?

We are not children, we can manage our own finances thankyou.

3 cheers to Osborne, this is a long overdue change to pension rules.

Just as a matter of interest, if the annuity companies are NOT ripping us off why have their shares dropped through the floor following this announcement? Because their inflated profits will disappear, profits made through a more or less zero risk business by taking all YOUR Money and dribbling it back to you.

Those who argue that they give a 6% return miss the point that they keep your capital - once they have it it is GONE forever, you will never see it again. 6% means that if they just dribbled your capital back to you without investing it at all, the money would last nearly 17 years - surpisingly this is about the average life expectancy of a (male) retiree at 65. So, in effect, they are using YOUR money to invest and taking ALL the returns for themselves - nice if you can get away with it.

Assume only a 4% real return (quite realistic), a pension pot of 100k, and a payout period of 17 years - they will make NOT LESS than 34,000 out of the annuity - probably closer to 50,000. Money that YOU could have if you look after your own pension "pot"

Update - the actual life expectancy in 2013
Women are now living to an average age of 82.8 years and men 78.8 years, according to the Office for National Statistics (ONS).

fireflybob
21st Mar 2014, 08:28
I just wish this change was retrospective - I took my annuity last year!

Choxolate
21st Mar 2014, 08:40
I just wish this change was retrospective - I took my annuity last year!
That's a bit of a bu99er.

ZFT
21st Mar 2014, 10:52
I don't want a Lamborghini but a nice J3 might now be considered!!! For once in my life I'm not too old (just)

Lon More
21st Mar 2014, 10:57
scam artists quickly come in to remove any money people save
The biggest bunch sitting on the government benches in Westminster

Wingswinger
21st Mar 2014, 11:08
It is fantastic news. I'm in the same camp as Choxolate and I'm very pleased to be able to manage ALL my own finances for the rest of my days. The other benefit of this reform is, I hope, that any residual capital in the pension fund on death can be bequeathed to one's descendants without the punishing 55% tax charge. I need to get onto my IFA to confirm that this will be the case.

John Hill
21st Mar 2014, 19:38
I think the trick is to decide how long you expect to be 'active' before going into the final stage of life where money is less of an issue than warm cups of tea and a comfy chair and adjust your finances so that only then do you become reliant on the basic old age pension (assuming your country provides such a thing).

sitigeltfel
21st Mar 2014, 20:20
The biggest bunch sitting on the government benches in Westminster

Again, you are confused. Gordon Brown raided 100 billion from pension funds, nothing short of outright theft. He is continuing his dishonesty by purloining money from the foundation (http://order-order.com/2014/02/13/gordon-brown-office-gives-just-1-in-4-pounds-raised-to-charity-funds-globe-trotting-lifestyle-with-10000-a-week-expenses/) he set up, ostensibly to raise cash for good causes, but in reality being used to fund his five star, jet set lifestyle.
The master of the reverse Midas touch even bullies the oh so compliant BBC into removing embarrassing footage from its archives. Charity begins at home....eh?

He gave away the gold, then screwed the pensioners, and is now shafting his benefactors. Only the buffoons cannot see it.

Milliband and Balls are worried that pensioners will use their new found financial freedom to squander their pension funds, which is understandable. Profligacy with pensioners money is a habit the Labour thieves like to keep to themselves.

Krystal n chips
22nd Mar 2014, 06:02
As we have a Coalition "Gov't" it was only natural I suppose, that, following the inspired Lib-Dem observation that future pensioners can splurge their pension pot on sex, drugs, fast cars and rock n roll, the Conservatives would follow suit.

Thus, to demonstrate how they really are the party in touch, and to promote further the benefits of the budget, in case anybody was still confused, here's their own contribution :

Grant Shapps: I love bingo and beer just like other hardworking people | Politics | The Guardian (http://www.theguardian.com/uk-news/2014/mar/21/grant-shapps-loves-beer-bingo-like-other-hardworking-people)

Hands up those who intend to blow the lot on twilight years debauchery, assuming you haven't already done so, before pitching up at you local Bingo Hall, on a Motorbility scooter, wearing black biker leathers, swilling cans of "John Smiths" and slamming their weeks State pension on the score card !

UniFoxOs
22nd Mar 2014, 13:02
Hands up those who intend to blow the lot on twilight years debauchery

Wish I had the option, unfortunately I had to buy an annuity some years ago before the value of my pension pot dropped so as to be worthless.

But I know plenty who would.

pax britanica
22nd Mar 2014, 16:34
I know Brown was much criticised for the tax he imposed on some pension funds but has any one either reversed the tax legislation or offered to pay the money back.

I rather doubt it, its the Governing classes who are the enemy here not individual parties. None the less I welcome the flexibility on pensions/annuities but I fail to see how the government can claim it needs to recover tax over and above a certain level, if I choose to splurge mine on a Lambourghini they get a huge chunk of VAT anyway.

racedo
22nd Mar 2014, 19:06
but I fail to see how the government can claim it needs to recover tax over and above a certain level,

Their claim is that they gave you tax relief on contributions so now if you taking the cash and spending it then it counts as income and accordingly you need to pay tax on it.

I can see the logic in this.

racedo
22nd Mar 2014, 19:13
In a way I don't disagree with the logic of what the Govt are doing in allowing people do what they want with their cash.

However I feel this will come back and cost billions as idiots grab the money, spend like :mad: and then demand the taxpayer be responsible because they are thick as pig :mad:.

I have deliberately got into buy to let properties as viewed pension as inadequate and believed that giving it to spivs made no sense.

As have various pension schemes dotted around the place then when come to retire taking the cash and paying off mortgages so I have the income from the properties makes sense to me.
Also means I can offload if needed at any time and pass them across to littlies (they won't be littlies at that stage) in a controlled manner.

Course if manage it to be big enough then buy the place in France I would like and live there with income from BTLs.

maxred
22nd Mar 2014, 19:25
However I feel this will come back and cost billions as idiots grab the money, spend like and then demand the taxpayer be responsible because they are thick as pig

+1

Agreed the logic is sound, agreed the logic, by default, is flawed. Race do is correct, the majority are so dumbed down, as to be frightening. So, they will be unable, to save the 15k in the first place, unable if they do, to hold onto it when it comes out in a lump.

My IFA, stated prior to this latest announcement, that 80% of the population would not get the correct, nor proper financial planning advice. They, as an IFA, had closed the books, stating that they could not possibly take on new business, in a financially viable sense, and would only concentrate on existing customers.

Now leaving the UK population to make their own Financial Planning decisions, sounds like a massive shit storm waiting to happen..

Shaggy Sheep Driver
22nd Mar 2014, 20:02
racedo and maxred, we are not talking here of giving people their state pension pots to pi55 up the wall. We are talking about pension funds voluntarily saved by individuals from their own earned money. Why the heck should the government be telling people what they can do with such funds?

racedo
22nd Mar 2014, 20:12
racedo and maxred, we are not talking here of giving people their state pension pots to pi55 up the wall. We are talking about pension funds voluntarily saved by individuals from their own earned money. Why the heck should the government be telling people what they can do with such funds?

Child Benefit - A Universal benefit for all children.
Now IF you are married and one person earns more than 60k then you ill be taxed on it to encourage people to give it up......................IF you not married and cohabiting it doesn't apply.

I see the day in the short future where persons with a Personal Pension will find themselves excluded or taxed out of taking the state pension.

Please remember that EVERYBODY is now automatically enrolled in a workplace pension and you have to opt out after you have been included.

Choxolate
23rd Mar 2014, 10:07
Racedo
In a way I don't disagree with the logic of what the Govt are doing in allowing people do what they want with their cash.

However I feel this will come back and cost billions as idiots grab the money, spend like :mad: and then demand the taxpayer be responsible because they are thick as pig :mad:.
I know let's not let anybody have any money - all earned income goes to the governement and they give you back what they feel you need. I mean we wouldn't want those thickos to actually have any control over their own lives would we.
I have deliberately got into buy to let properties as viewed pension as inadequate and believed that giving it to spivs made no sense.

As have various pension schemes dotted around the place then when come to retire taking the cash and paying off mortgages so I have the income from the properties makes sense to me.

Excellent so YOU want to be able to take YOUR pension pots to pay off your Buy-to-Let mortgages but feel that the great unwashed shoudn't have the same ability to control THEIR money? Don't you feel that there may be a flaw in the equity of your POV?

Cacophonix
23rd Mar 2014, 10:22
I find it almost unbelievable that the government did not consult with senior insurance industry figures before launching this misguided proposal. It certainly has spooked the big players in the annuities market which, while having been a cash cow for the insurers over the years at the expense of savers has been in the doldrums over the last five years and is likely to be exposed as a giant Ponzi scheme if people starting withdrawing willy-nilly....

Life insurers urge regulator to intervene in pensions shake-up - Telegraph (http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/insurance/10716782/Life-insurers-urge-regulator-to-intervene-in-pensions-shake-up.html)

Caco

Shaggy Sheep Driver
23rd Mar 2014, 10:35
Annuities a Ponzi scheme? Hardly! They are a captive market and are therefore heavily skewed to be profitable to the annuity companies and poor value for pensioners. How would it be otherwise in a market where your customers are captive turkeys and have nowhere else to put their money (apart from complex and usually innappropriate draw-down schemes)?

The Annuity providers see their feeding trough being opened up to others, and understandably they are squealing in protest!

Fox3WheresMyBanana
23rd Mar 2014, 10:38
I'll repeat what I said earlier. This method of allowing people to handle their own pensions is a standard Canadian RRSP. You know, the most stable economy in the G8. So, unless you consider the average Brit to be mentally defective compared to the average Canadian, then all the forecasts of gloom and disaster are just plain wrong.

Cacophonix
23rd Mar 2014, 11:00
Shaggy Sheep Driver...

I think we are violently agreeing. I used the Ponzi scheme metaphor because if the poor folks who are paying into these pots suddenly were able to call on their money, the whole rotten edifice would come crashing down within days...

I agree with everything else you have written.

Caco

Shaggy Sheep Driver
23rd Mar 2014, 11:21
Cacophonix - but the thing about a Ponzi scheme is that if investors pull their cash, the entire scheme collapses and everyone loses their money. If annuity investors decide to invest elsewhere, existing annuites will not be affected (they were and are an excellent deal for the providers). That annuities might well die out in future is likely, but that won't affect anyone already commited to one. So not a Ponzi scheme?

Andy_S
23rd Mar 2014, 11:24
Annuities a Ponzi scheme? Hardly! They are a captive market and are therefore heavily skewed to be profitable to the annuity companies and poor value for pensioners. How would it be otherwise in a market where your customers are captive turkeys and have nowhere else to put their money (apart from complex and usually innappropriate draw-down schemes)?

The Annuity providers see their feeding trough being opened up to others, and understandably they are squealing in protest!

Absolutely.

One thing that doesn't seem to have been widely picked up on is that with people able to take their pension pot where they like, the market will be opened up to new players offering new and quite possibly more flexible schemes. The existing annuity suppliers are going to be forced to raise their game.

As for Ponzi schemes, isn't the biggest one of the lot the state pension in which people retiring today are basically paid by those still working? Which requires more and more people to start paying in at the bottom of the pyramid to keep it afloat??

Cacophonix
23rd Mar 2014, 11:27
Shaggy Sheep Driver your point is well made. As you say the collapse of a Ponzi scheme hurts everybody...

Caco

racedo
23rd Mar 2014, 15:35
Excellent so YOU want to be able to take YOUR pension pots to pay off your Buy-to-Let mortgages but feel that the great unwashed shoudn't have the same ability to control THEIR money? Don't you feel that there may be a flaw in the equity of your POV?

Think you need to read the OP again.....

Never said I opposed it, I question whether taxpayers end up taking the hit.

I remain always unconvinced on Govt.

I see it generating a bubble as people chuck money into worthless schemes where never paid out and then claim compensation.

racedo
23rd Mar 2014, 16:12
One thing that doesn't seem to have been widely picked up on is that with people able to take their pension pot where they like,

Had thought about that bit and then forgot it, it will show politicians stupid as always.

John and Edith, married in 1975 when they both 25, both retiring at 65, their kids both have kids. They have lived in same house since 1979 when area was really really nice, it has changed over the years and become more mixed with immigrants. They still love the area and most of their neighbours but seems to become more problematic with police being an ever present on the area around. Both in Pension schemes that combined worth 330k and they figured a 15k joint pension to live on, not great but no mortgage and state pension will allow a comfortable life. They enjoy travelling and would love to move close to their son in Australia but figure a once a year trip. Well that was 2014 plan.

NOW
Pension pot of 330k all accessible, Govt takes 30k in tax, John and Edith decide that why stay.
Son says 300k is worth over 500k Aussie dollars, house worth 200k which worth 360k Aussie dollars they would like to keep but maybe time to enjoy retirement somewhere warm where family is. Aussie Govt don't give permanent Visa to elderly but that level of Investment they may review.
John and Edith have a huge goodbye party in 2015 as they leave for Australia and their state pension gets paid direct to them.

So 2 scenarios where now pensioners decide to enjoy their money where they want to and 500k heads off to Australia to be invested there.
Not sure where UK benefit is aside from the one off 30k tax.

Country could be anywhere BUT do see many people in this situation taking pension pot and exiting country.

Gertrude the Wombat
23rd Mar 2014, 17:22
Not sure where UK benefit is aside from the one off 30k tax.
House freed up. With our current housing shortage that's worth having.