The death of the annuity, has been greatly exaggerated. They remain one of the most suitable options for clients who want the peace of mind that comes with ensuring the money they have accrued during their lifetime lasts the rest of their lives.
Of course, not all annuities are the same. There is still a Huge different between an ordinary, run-of-the mill product bought from a ceding provider that does not operate in the open market, and one that offers value for money. This is before factoring in the uplift that many can now enjoy From individually underwritten enhanced products reflecting their health and lifestyle.
The UK Taxation of Pensions Act 2014has paved the way for some of the most radical changes to the UK pensions tax regime since A-day (6th April 2006)
Retirees now have more options than ever as to how they use their pension pots. However for those that seek a secure income for life an annuity will in most cases still be the ideal product and that’s why shopping around is just as vital as it has ever been.
Even though the value of the annuities has been questioned, they are likely to remain the most popular option with many people for a very long time, especially for the more cautious investor.
The value of the annuity market has been misrepresented, in the main by those who do not understand its true potential or those who believe every statistic reported in the press. However, more and more individuals are starting to seek greater knowledge about their financial options.
The additional income that can be gained from shopping around is surprising which is why it is important to ensure that you are fully aware of your options when doing so. Much more needs to be done to raise awareness as the extra income that can be gained from shopping around for an annuity can go a long way towards vastly improving the standard of living of a retired person
Three main factors drive the annuities market.
· An Annuity provides a guaranteed income for life, irrespective of how long an individual might live. The certainty that you have a secure income for life is imperative to some people.
· With forecasts now showing nearly one in five people will now live to celebrate their 100th birthday in the UK, the reality is that annuities are being paid for longer than ever before.
· Good annuities are predictable, reliable and generally very plain indeed. The certainty of income in today’s markets is something that risk adverse investors are keen to lock into.
However an annuity is not right for everyone, if you are comfortable taking risks with accrued capital and are confident you could stand a loss if the performance of an investment is not what you had hoped for, then there are other options available to you.
Historically Investment yields were much, much better. But times and the investment landscape have changed and if you are retiring today then rates now need to reflect two things: current market yields and statistics which show people are expecting to enjoy their income for many more years.
So whether you believe the negative press or not, before you make a decision to move your money,
take a careful look at your options or talk to Dino Zavagno or a member of his team at Gladstone Morgan to discuss your pension requirements at info@gladstonemorgan.com
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