Annuities are retirement products that guarantee you with a regular income after you retire.
You choose a provider, pick an appropriate annuity to suit your needs and, in exchange for some or all of your pension savings, the annuity provides income until you die.
The use of annuities has declined markedly in recent years, with figures from the Association of British Insurers suggesting sales have fallen by as much as 80% since 2014.
Research from the Financial Conduct Authority reflects this trend, with year-on-year annuity sales down 16% in the six months to April 2017.
This is partly due to the fact that, following former chancellor George Osborne’s introduction of pension reforms in 2015, people now have more options when it comes to planning their retirement.
However, are annuities still a viable retirement planning option to consider in 2017?
A.I. has been firmly on the agenda in the world of finance. At a recent conference, the Product Editor of Wired magazine was unimpressed with today’s early options like Amazon’s Alexa. But in five years from now, it is expected that this technology will be pervasive and “conversational A.I.” will be the way we help with our finances. Until then, an Independent Financial Adviser (IFA) is still your best bet, and even in the near future, we do not expect to see many people using a robot to make choices about their family’s financial future!
The different types of personal pensions and what to consider when deciding if a scheme is suitable for you.
Personal pensions are pensions that you normally arrange yourself rather than through your employer.
They are almost always defined contribution schemes and as such work in much the same way as the defined contribution schemes offered by employers.
Auto-enrolment has made a big difference the workplace pension landscape in many important ways and with the right advice allows you to make the most out of your workplace pension. Firstly, by 2018 it will be legally required for every employer to offer a workplace pension scheme to its employees. Every employee over the age of twenty-two who earns at least £10,000 will have to be enrolled on a workplace pension scheme.
Along with the government state pension, this means the majority of UK people will enter retirement with a number of income streams.
But for many, relying on the government state pension and the pension pot generated by auto-enrolment will represent a significant drop in their annual income, and may not be conducive to the kind of lifestyle they have been used to and want in retirement. Saving into a personal pension plan is an obvious retirement strategy to remedy this, but are there alternative workplace pension options that can be explored?
A guide to choosing how to access your pension savings.
Your pension can often seem like an abstract concept among the early morning commutes, home purchases, new jobs and other events that make up the average person’s working life. However, when you begin to reach the end of employment, the abstract suddenly becomes very real.
Is your retirement priority to attain a steady level of income to help you see out your days in comfort, or do you have other designs for your pension savings?
Either way, you will have to decide how you are going to access your pension. The variety of different options open to you will have wide-reaching effects on the rest of your life.
On January 1st 2006, the UK had 105,710 regulated individuals calling themselves Independent Financial Advisers, able to advise on pensions and investments.
Ten years later on and after a huge change to the way Independent Financial Advisers area allowed to advise customers, there are now only 29,144 Independent Financial Advisers who hold the relevant level 4 qualification.