9 April 2012

Bad News for Retirees

Although most people cannot now be forced to retire at a certain age, we don't exactly have complete flexibility on when we do. So it certainly doesn't seem fair that those who want to retire at the moment are liable to get a particularly poor deal.

That doesn't apply if the bulk of your pension income will come from a reliable defined benefit (final salary) pension scheme - such as public sector workers (although many don't seem to realise the value of what they have got).

But if you have a money purchase pension plan and are intending to buy an annuity, things have never been worse. And if you are a man, things will go downhill even further from December 2012. EU rules will stipulate that men - who until then get a better annuity rate due to shorter life expectancy - have to be offered the same rate as women. Women's rates may rise (or they may not!).

The only positive angle on the situation is that there are now a range of other ways of taking an income from your pension which may improve the situation. Advice is needed to navigate your way through the options, but it's essential to look given that these are decisions which will affect the rest of your life.

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