In the UK it has always been tax effective for medium and high earners to make substantial pension fund contributions because those contributions are tax free. As a result there are a lot of people out there with large pension funds.
If your pension is in full or in part a "defined contributions" scheme (i.e. you make payments into it over time and it is then supposed to provide you with an income in retirement) then when you retire you used to be able to take a small proportion out as a cash lump sum and the rest of it had to be invested in an annuity which would provide you with an income in retirement.
There were complaints about this because annuity returns have fallen significantly - more than halved in fact as a result of lower investment returns and people living longer - and because "it's my money and I should decide what to do with it" (although given the tax relief received over the years, in a way society has made a significant contribution IMO).
In response to this, the government changed the rules to allow people much more freedom in accessing their pension pots. The fear was that people would take their money, pay a ****-load of tax on it and then blow it all (there were jokes in the media about buying Lamborghinis). Other people said that people would be sensible and even if they didn't buy an annuity then at least they would use the money in some other way to secure a retirement income (like buy a property to rent out).
Now the first set of figures are out and so-called "retirement experts" are said to be worried.
http://ift.tt/1JwROBj
What this fails to capture, as the article clearly explains, is what people did with the money instead. 88% of these people had funds less than £30k (which at current annuity rates would maybe get you £100 a month) so maybe the much, much bigger issue is the tiny, tiny sizes of most people's retirement funds.
If your pension is in full or in part a "defined contributions" scheme (i.e. you make payments into it over time and it is then supposed to provide you with an income in retirement) then when you retire you used to be able to take a small proportion out as a cash lump sum and the rest of it had to be invested in an annuity which would provide you with an income in retirement.
There were complaints about this because annuity returns have fallen significantly - more than halved in fact as a result of lower investment returns and people living longer - and because "it's my money and I should decide what to do with it" (although given the tax relief received over the years, in a way society has made a significant contribution IMO).
In response to this, the government changed the rules to allow people much more freedom in accessing their pension pots. The fear was that people would take their money, pay a ****-load of tax on it and then blow it all (there were jokes in the media about buying Lamborghinis). Other people said that people would be sensible and even if they didn't buy an annuity then at least they would use the money in some other way to secure a retirement income (like buy a property to rent out).
Now the first set of figures are out and so-called "retirement experts" are said to be worried.
Quote:
|
Figures from the City regulator show that 120,969 who cashed in a pension fund between July and September last year took the whole lot out. In contrast just 58,021 people used the money to buy themselves an income, said the Financial Conduct Authority (FCA). |
What this fails to capture, as the article clearly explains, is what people did with the money instead. 88% of these people had funds less than £30k (which at current annuity rates would maybe get you £100 a month) so maybe the much, much bigger issue is the tiny, tiny sizes of most people's retirement funds.
via International Skeptics Forum http://ift.tt/1RlLtvu
Aucun commentaire:
Enregistrer un commentaire