The death of annuities is premature but the lifetime allowance must go
Steve Patterson, Managing Director of Intelligent Pensions, the specialist pension and retirement advisers warned that the death of annuities may be premature at The Annual AMPS conference in London today. He also called for the Government to rethink the use of the lifetime allowance. If the lifetime allowance was removed then the pensions system would be far simpler and those that have diligently saved for retirement are not penalised.
“It's not just the private sector so called ‘fat cats’ that are caught by the lifetime allowance, it is also doctors, dentists, vets and other professions who will be hit hard but won't necessarily be aware of it. It's an insidious back handed tax charge on people who made the effort to plan for their future needs and will backfire on the government.”
77% of those attending the AMPS conference said that they believed the Government should abolish the lifetime allowance.
He added: “Much has been said about the death of annuities since the Budget. While the link between retirement and annuitisation is broken annuities still have their place, it is no longer whether to buy an annuity, it is when. An annuity is ultimately still the only way to provide real security and peace of mind in later life.
“The guidance guarantee needs to be very carefully thought through and for consumers to understand the ‘at’ retirement decisions and post retirement risks needs a great deal of explanation. It needs more than just words and advisers are far better placed to explain the issues and consequences. Technology and robust cash flow modeling makes it much easier to do and allows those approaching retirement to see into the future. Looking at what if scenarios. It's like satellite navigation in cars and we've all seen how much that helps on a long and uncertain journey.”