Simon Read: Paltry pot needs pre-Budget boost
Saturday 05 December 2009
Wednesday's Pre-Budget report will offer little to please. Ahead of next year's election, Chancellor Darling will simply be tweaking tax to little noticeable effect I suspect. But there's one tax change he could make that would make a positive difference to hundreds of thousands of struggling people approaching retirement.
I'm talking about people with a small pension pot, often of less than £10,000. At present, they are forced to use their money to buy an annuity to give them an income in retirement. But for many, the amount of income is so paltry as to make it almost not worthwhile. For instance, at the current rates, a £10,000 pension pot could buy an annuity of less than £600 a year, or around £11.50 a week.
If they were instead allowed to take the cash – all £10,000-plus of it – it could make a massive difference to them, particularly to those suffering from ill-health. But anyone wanting to cash in their pension pot faces a heavy tax penalty at the moment. The penalty itself is necessary to stop those lucky enough to have huge sums stashed away – like most MPs – from simply cashing it in, but it leaves those already struggling facing even more financial concerns.
The answer, according to charity Age Concern and Help the Aged, is to change the tax rules so that anyone with pension savings too small to annuitise can draw them in cash without being penalised. Andrew Harrop, head of public policy at the charity, says: "The tax system penalises those with small pension pots and the annuities market is hamstrung by legislative complexity and dominated by a few major players. This adds up to a poor deal for people with small pension pots. The pre-Budget report provides an opportunity for ministers to signal a shake-up of the system." Over to you, Darling.
Questions of Cash: Bupa costs bore no relation to what I'd been quoted
Five Questions On: Pensions advice
Problem gambling: Amid heavy advertising and a surge in remote sports betting, more and more 16 to 24-year-olds are now seen as 'at risk'
Simon Read: Retirement advice is good - if it's impartial
The HiFX guide to managing corporate foreign exchange and international payments
- 1 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 2 Students offered grants if they tweet pro-Israeli propaganda
- 3 Exclusive: Cameron’s Big Society in tatters as charity watchdog launches investigation into claims of Government funding misuse
- 4 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
- 5 Israel has discovered that it's no longer so easy to get away with murder in the age of social media
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Day In a Page
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar