- Home » Expat News » UK pension revolution sees annuity sales fall by 50 per cent
UK pension revolution sees annuity sales fall by 50 per cent
| Published: | 4 Sep at 6 PM |
Want to get involved?
Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
Become a Local Expert and contribute articles.
Get in touch today!
The biggest change in UK pension legislation in almost a century, slated to result in significant losses for product providers and FAs, is already triggering a massive fall in annuity purchases.
The new rules won’t come into effect until April next year, but a huge slowdown in annuity sales is already being reported. Previously, retirees forced by law to convert their pension pots to annuities were unwittingly locked into unsatisfactory deals, bringing accusations of rip-offs and mis-selling.
The product and its compulsory element acted as a goldmine for unscrupulous salesmen, both in the UK and in many expat destinations overseas. A major complaint was that, should the holder die earlier than expected, the remainder of the money reverted to the product provider, leaving the bereaved spouse with nothing.
It seems that many with smaller pension pots are considering taking the entire amount in cash rather than investing, and others are postponing the date of their retirement as they are still happy in their work or would prefer to have a steady income for longer. A few feel they cannot yet afford to retire, and the fall in annuity rates during the last two decades has made the product generally unpopular with pensioners.
For expats, the dilemma is similar, especially if they are working overseas or have retired early with enough capital to see them through until their official retirement age. The solution, however, is more complicated due to a lack of qualified, experienced advisors familiar with UK regulations and changing requirements.
The laws regarding pension transfers to QROPS are complicated, and inexperienced investors looking for someone to trust are walking a minefield in many locations abroad. A major problem is protection, as the FCA’s authority stops at the UK’s borders, and many overseas jurisdictions’ laws don’t allow for misdemeanors committed by unlicensed expat operators.
The new rules won’t come into effect until April next year, but a huge slowdown in annuity sales is already being reported. Previously, retirees forced by law to convert their pension pots to annuities were unwittingly locked into unsatisfactory deals, bringing accusations of rip-offs and mis-selling.
The product and its compulsory element acted as a goldmine for unscrupulous salesmen, both in the UK and in many expat destinations overseas. A major complaint was that, should the holder die earlier than expected, the remainder of the money reverted to the product provider, leaving the bereaved spouse with nothing.
It seems that many with smaller pension pots are considering taking the entire amount in cash rather than investing, and others are postponing the date of their retirement as they are still happy in their work or would prefer to have a steady income for longer. A few feel they cannot yet afford to retire, and the fall in annuity rates during the last two decades has made the product generally unpopular with pensioners.
For expats, the dilemma is similar, especially if they are working overseas or have retired early with enough capital to see them through until their official retirement age. The solution, however, is more complicated due to a lack of qualified, experienced advisors familiar with UK regulations and changing requirements.
The laws regarding pension transfers to QROPS are complicated, and inexperienced investors looking for someone to trust are walking a minefield in many locations abroad. A major problem is protection, as the FCA’s authority stops at the UK’s borders, and many overseas jurisdictions’ laws don’t allow for misdemeanors committed by unlicensed expat operators.
Comments » No published comments just yet for this article...
Feel free to have your say on this item. Go on... be the first!
