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sâmbătă, 19 februarie 2011

The UK's Annuity Market

The UK's Annuity Market
The compulsory age of 75 is going to be removed by the UK government for those pensioners wishing to invest in an annuity. Low annuity rates have resulted in many pensioners getting an unfair deal due to the previous government ruling that forced pensioners to invest into an annuity plan regardless of the rate.
A number of pensioners and investment advisers are outraged with the current system which can further punish those with larger pension pots by subjecting them to a low income if annuity rates are particularly low due to market forces. One of most controversial policies under current legislation is the fact that if pensioners die before their annuity is fully paid the remaining amount is usually paid to the insurance company.
New government ruling will change this system dramatically and allow pensioners to shop around and wait for the highest annuity rates available before signing up to a scheme. For wealthy investors who can prove that they have a pension income of at least 20,000, made up of annuities, state pension and salary pension, the option of a draw down unlimited income is also available.
The minimum income level is designed to protect pensioners requiring state help if they have a small pension and run out of money quickly and the proposed level is much higher than what was predicted by experts. However the government has stated that pensioners will be able to include a number of investments and pension payments in the income level which came as a surprise to many.
As well as the ability to shop around the new legislation will prevent insurance companies from keeping the remaining amount of the pension if the investor dies. The lump sum will be returned to the investor's estate and family but will be subject to a hefty tax of around 55%.

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