Ethos Public Relations Manchester

New annuity rules cause confusion – but majority unaffected

by Ethos public relations

The abolition of the rule that an annuity must be bought by age 75 (introduced on April 6) is being hailed by some in the financial sector as providing greater freedom - but in reality it is causing some confusion to retirees, according to annuity guidance company, WhoPaysMost.com.

“The change in legislation has resulted in some people unduly worrying about their options,” said Scott Lewis, Head of Annuities.

“However, the revision of the legislation only affects a very small percentage of the population and in reality very little will change for most retirees. “

Until the 6th April 2011, those retirees looking to purchase an annuity with their private pension pot had to do so before their 75th birthday. A temporary measure, extending the age to 77 had been put in place following the Government’s announcement that the rules were being changed, but from 6th April 2011, the age limit is completely removed.

Under the new rules there will be a minority of people who don’t have to buy an annuity at all and could choose to take up to the whole amount in their pension fund as a lump sum. This will only be possible if they have a guaranteed income of at least £20,000 per year - known as the Minimum Income Requirement.

“In reality the majority of people have pension funds of less than £50,000 and won’t meet the Minimum Income Requirement, even when taking their state pension income into account. Therefore an annuity will more than likely be their only option.” said Scott.

“For most people, an annuity will remain the right choice as it guarantees their income for the rest of their life. Even those people who meet the Minimum Income Requirement may still consider an annuity if they want a risk free method of securing retirement income.”

There are some further positive changes that come into effect from 6th April such as the ability to defer taking your tax free lump sum until after age 75 (at the time you  purchase your annuity) and the ability of annuities to pay lump sum death benefits after your 75th birthday. However, this has to be balanced with the fact that the tax charge on lump sum death benefits is increasing from 35% to 55%.

Scott adds: “A conventional lifetime annuity provides a guaranteed, annual income for life. People who are choosing an annuity should make sure they do some research rather than just accepting the deal offered by their pension company. They could potentially miss out on thousands of pounds over their lifetime by accepting an income below that available on the open market.”

WhoPaysMost.com have a team of friendly staff available on freephone 0800 810 12 12 or an online annuity calculator at www.WhoPaysMost.com which allows people to see just how much their pension could be worth, quickly and easily.

To read other news from WhoPaysMost.com click here.

Posted at 4^th April 2011

About to retire?

by Ethos public relations

WhoPaysMost.com is a new website providing consumers who are about to retire with a quick and simple online Annuity Calculator.

Scott Lewis, Head of Annuities at WhoPaysMost.com said: “It is widely accepted that many consumers don’t shop around to find out which annuity provider pays the most.  This is because a lot of people don’t think it’s worth the effort or find the process confusing.  WhoPaysMost.com has an online annuity calculator which allows people to see just how much their pension could be worth, quickly and easily.

“Simply answer a few questions using the online annuity calculator and you can get an indication of how much you could receive in seconds.  We believe our quick and simple calculator is the easiest annuity tool on the market and the figures it generates can then be followed up with a freephone call to our friendly helpline staff.”

As the UK’s ‘baby boomers’ approach retirement, WhoPaysMost.com is helping them get the most from their pension pot.

Scott adds:  “It’s shocking to think that pensioners are estimated to have sacrificed over £13 million* each week over the last decade, mainly because they have simply accepted the annuity figure provided by their existing provider.

“We want to get home the message that the annuity you accept when you retire is the income you get for the rest of your life - it’s impossible to fix afterwards.

“We can make the process really simple.  A short, freephone call to a guidance officer at WhoPaysMost.com may result in an increase in retirement income for life.”

Contact WhoPaysMost.com  when you receive your retirement pack from your current provider.

For more information contact 0800 810 1212 or email annuities@whopaysmost.com or visit www.whopaysmost.com

*Research by Partnership, Dec 2010

To read other news from WhoPaysMost.com click here.

Posted at 10^th March 2011