Five questions on the annuity row

 

Annuity row? Is that a rediscovered classic by John Steinbeck? Sadly no. It’s an argument kicked-off by pensions minister Steve Webb who this week published proposals for reform of the annuity market which are now being considered by the Government.

What has Mr Webb proposed? In simple terms he suggested that pensioners should be given the power to switch annuities after they’ve taken them out, in the same way that people can switch mortgages.

That sounds very sensible. So who is arguing against that? Forcing annuity providers to allow transfers would mess up the way they calculate payouts, warned Alan Higham of Annuity Direct. The net result could be a 25 per cent fall in rates as the alternative, exit charges wouldn’t be acceptable to consumers.

So the pensions industry is suggesting that Mr Webb’s proposals are unworkable. What’s their solution? The problem with annuities is that many people simply take the deal offered by their pension company when they could get much higher payouts elsewhere. So people need to be educated about any alternatives. “The solutions are there – we simply need to make it easier for people,” said Tom McPhail, chairman of lobby group the Pensions Income Choice Association (PICA).

Is there anything new being done in order to help? On Monday a new directory of pension advisers is being launched at www.Pick-A.org. It’s been set up by PICA to help put people approaching retirement in touch with advisers who may help them get a better pension income. “It’s been designed to help people understand their options and find the help they need at the right price,” said Mr McPhail. It’s a step in the right direction, but more needs to be done to ensure we all get a fair deal when arranging a retirement income.

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...

    SThree: Trainee Recruitment Consultant

    £20000 - £40000 per annum + competitive: SThree: Exciting career prospect for ...

    Ashdown Group: Trainee Consultant - Surrey / South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Ashdown Group: Trainee Consultant - Surrey/ South West London

    £22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

    Day In a Page

    A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

    Britain's Atlantis

    Scientific study beneath North Sea could revolutionise how we see the past
    The Queen has 'done and said nothing that anybody will remember,' says Starkey

    The Queen has 'done and said nothing that anybody will remember'

    David Starkey's assessment
    Oliver Sacks said his life has been 'an enormous privilege and adventure'

    'An enormous privilege and adventure'

    Oliver Sacks writing about his life
    'Gibraltar is British, and it is going to stay British forever'

    'Gibraltar is British, and it is going to stay British forever'

    The Rock's Chief Minister hits back at Spanish government's 'lies'
    Britain is still addicted to 'dirty coal'

    Britain still addicted to 'dirty' coal

    Biggest energy suppliers are more dependent on fossil fuel than a decade ago
    Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

    Orthorexia nervosa

    How becoming obsessed with healthy eating can lead to malnutrition
    Lady Chatterley is not obscene, says TV director

    Lady Chatterley’s Lover

    Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
    Farmers in tropical forests are training ants to kill off bigger pests

    Set a pest to catch a pest

    Farmers in tropical forests are training ants to kill off bigger pests
    Mexico: A culture that celebrates darkness as an essential part of life

    The dark side of Mexico

    A culture that celebrates darkness as an essential part of life
    Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

    Being sexually assaulted was not your fault, Chrissie Hynde

    Please don't tell other victims it was theirs
    A nap a day could save your life - and here's why

    A nap a day could save your life

    A midday nap is 'associated with reduced blood pressure'
    If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

    If men are so obsessed by sex...

    ...why do they clam up when confronted with the grisly realities?
    The comedy titans of Avalon on their attempt to save BBC3

    Jon Thoday and Richard Allen-Turner

    The comedy titans of Avalon on their attempt to save BBC3
    The bathing machine is back... but with a difference

    Rolling in the deep

    The bathing machine is back but with a difference
    Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

    Conservatives plot a motoring revolution

    Draft report reveals biggest reform to regulations since driving test introduced in 1935