Avoid the stampede in rush for pensions cash
How do you explain this ? A government website, where 65 year olds desperate for fixed and guaranteed growth can order the new Pensioner Bonds, crashes thanks to the overwhelming demand for taxable returns no higher than 4% pa.
These are the same folk featured on Channel 4’s Dispatches who can’t wait for new pensions freedoms coming into force in April to turn their backs on even better guarantees paid as monthly income, from their retirement pension pots.
Crazy or what ?
Dispatches featured a lady pensioner in ill health who’d bought a fixed and guaranteed income( sometimes known as an annuity ) providing a 10% tax free monthly income for life from her £40,000 pension fund and who was “gutted “ that if she’d waited she could “ take it out in a lump and give it all away”.
She also said wrongly the income was only paid for five years. No mention was made of any tax consequences.
Another chap had answered an advert on blowing his tax free cash of only £15,000 on a world cruise, to invest the rest in storage units and surprisingly hadn’t seen any Income. At least he resisted “investing “ in Saudi Arabian car parking places instead.
Pensions minister Steve Webb , who wouldn’t get far on Mastermind answering questions on UK Pension mis-selling over the last 26 years, blamed insurance companies for mistrust and confusion with their documents featuring options to would-be retirees.
Oddly, he didn’t mention that pensions are so complicated thanks to over 500 changes to pensions Laws since 1987 as well as an insistence by financial regulators that all such documents be written in ancient sanskrit. It doesn’t help, of course, that too many take “advice” from their insurance company.
You wonder about the agenda behind these programmes. Can presenters really be so thick or one-sided?
Be clear about this …. do not expect anybody other than experienced independent financial advisors to advise you on what to do with your pension pots. They are the ONLY folks who are approved by the Financial Regulation Authority and who are compelled by law to act in your best interests. Nobody else is.
Still confused ? Well , do nothing until you are not !
Alan Steel is chairman of Alan Steel Asset Management