Change To Private Pension Rules

[overherebc]

Does anyone have any information on the new rule to be applied next year to private pensions.

From what I can gather it will change the annuity value of pensions to bring both male and female annuities into line.

I would take it that would mean that the value of the pension for a male will drop to the same level as a female because I really can't see them putting any of the values up if they have a way of getting them down.

Any info on this would be well received

Cheers

[BigJohnnyBKK]

Do you mean for Thai government employees, or American oil-industry contractors or. . .?

[overherebc]

Do you mean for Thai government employees, or American oil-industry contractors or. . .?

Should have said UK and Euro pensions

[BigJohnnyBKK]

Should have said UK and Euro pensions

Hard for an American to conceive of such things being regulated much at all, much less by international bodies.

Wow.

[overherebc]

Should have said UK and Euro pensions

Hard for an American to conceive of such things being regulated much at all, much less by international bodies.

Wow.

All the recent changes to pension rules in Europe came about because previously men retired at 65 and women at sixty so they are trying to get them in line with each other. All it seems to be doing is dropping the value of mens pensions to the same level as womens pensions but as each change involves a 350 page explanation by the government body it can be quite difficult to understand how you yourself can be affected by the new changes, unless you're a qualified lawyer.

[AyG]

The OP's description of the situation is fairly accurate. The meddlesome European Union (specifically the European Court of so-called Justice) has decided that providers of annuities can no longer take into account the fact that women tend to live longer than men in their calculations. That means that whereas in the past a lump sum used to buy an annuity (which is traditionally what has been done in the UK with pension funds upon retirement) provided a slightly higher level of income for a man than a woman (because the expectation was that the man would snuff it sooner, so cost less), now the man's pension fund will buy a smaller income in retirement, whilst a woman's will buy a higher one, with both sexes receiving the same level of annuity income, all other things being equal.

This all comes into effect in December this year, so anyone male contemplating purchasing an annuity soon should get his skates on, whilst a woman should hold her horses.

[Devmartin]

yes great post.

[overherebc]

The OP's description of the situation is fairly accurate. The meddlesome European Union (specifically the European Court of so-called Justice) has decided that providers of annuities can no longer take into account the fact that women tend to live longer than men in their calculations. That means that whereas in the past a lump sum used to buy an annuity (which is traditionally what has been done in the UK with pension funds upon retirement) provided a slightly higher level of income for a man than a woman (because the expectation was that the man would snuff it sooner, so cost less), now the man's pension fund will buy a smaller income in retirement, whilst a woman's will buy a higher one, with both sexes receiving the same level of annuity income, all other things being equal.

This all comes into effect in December this year, so anyone male contemplating purchasing an annuity soon should get his skates on, whilst a woman should hold her horses.

Thought it was April next year.

Phone calls start to the UK on Monday.

Will post any new info after that.

[Rob8891]

I am halfway through the process right now. I was planning to take my private pension early next year. No pension provider could (would) tell me how this will affect my pension. I am now taking it in December instead.

The best advice I could get, from an independent adviser, was that it is possible that annuity rates for males could drop by 3% - 4%. There would probably be no adverse effect for females, although my suspicion is that annuity providers will make a windfall profit by maintaining current female rates, and dropping the male ones to match. Parity achieved and more weary bankers rubbing their sticky little hands with glee.

EDIT.... Sorry, forgot to mention, I am referring to a UK-based pension fund.

[fletchsmile]

Hargreaves Lansdown have some good info on their website

http://www.hl.co.uk/pensions/annuities/male-pension-incomes-could-fall-due-to-eu-gender-directive

Euro bureaucracy .... gone crazy. At least it creates entertaining characters like Nigel Farage...

[BigJohnnyBKK]

Parity achieved and more weary bankers rubbing their sticky little hands with glee.

I doubt if the bankers are weary, unless it's due to their not being able to sleep at night.

[Rob8891]

Parity achieved and more weary bankers rubbing their sticky little hands with glee.

I doubt if the bankers are weary, unless it's due to their not being able to sleep at night.

SPOONERISM.....

[NeverSure]

Should have said UK and Euro pensions

Hard for an American to conceive of such things being regulated much at all, much less by international bodies.

Wow.

Ain't that the truth. No outside body tells the US what to do, not even the UN. It would require a treaty, ratified by 2/3 of the senate or 67 senators and a signature of the president. There will never in my lifetime be 67 senators to agree on anything, LOL. They can often get the 51 majority to agree on a law.

I think the UK was smart to keep its own currency and it's none of my business, but I sometimes wonder why they don't pull out of the EU. I always make it clear that I love and respect the Brits (US here) and think they are the best of the bunch over there.

[BigJohnnyBKK]

Parity achieved and more weary bankers rubbing their sticky little hands with glee.

I doubt if the bankers are weary, unless it's due to their not being able to sleep at night.

SPOONERISM.....

reawy? reawy reawy what Mr Fudd?

Not (just) taking the piss actually curious what you meant to write. . .

[Devmartin]

I like you your post.

[delgarcon]

Any of you that are retired and have been living outside of the UK for 5 years or more can take your PP out of the UK and invest it in a QROPS. The big advantage of this is that you are not obliged to buy an annuity paying a miserable 3% and in the event of your death the pension pot in the QROPS becomes part of your estate. To qualify, however you must not have cashed in any part of your pp already.

[TommoPhysicist]

You no longer need to buy an annuity with your UK pension fund.

You can keep it invested and withdraw (after age 55) up to 8% a year to live on (25% once only)

The fund can then be passed on to your wife or children after you die, and they can do the same.

Why would you want to give your fund away for an annuity?

Anyone thinking of buying an annuity should have their heads examined IMHO.

[AyG]

You no longer need to buy an annuity with your UK pension fund.

You can keep it invested and withdraw (after age 55) up to 8% a year to live on (25% once only)

The fund can then be passed on to your wife or children after you die, and they can do the same.

Why would you want to give your fund away for an annuity?

Anyone thinking of buying an annuity should have their heads examined IMHO.

Some inaccurate and misleading information there.

The maximum amount of income that may be drawn is 100% of the single life annuity that somebody of the same sex and age could purchase based on Government Actuary's Department rates. In other words, a pension in income drawdown can only pay out as much as an equivalent annuity. In practice, this is determined by 15 year gilt rates and one's age. At age 55 you can only withdraw 4.3% per annum - not 8%. You currently have to be over 75 to withdraw 8%.

(Flexible drawdown does allow you to withdraw more, but you already need GBP 20,000/year guaranteed pension before that is permissible.)

You can pass on any remaining pension fund - but it's subject to a 55% tax first. (This tax change does not apply if you take your pension offshore in a QROPS or similar scheme.)

Annuities have their place. The income they provide is guaranteed, unlike an income from a pension fund which remains invested in financial markets; there may be a financial meltdown, but you'll still get your pension paid. They can also provide an inflation-linked income which will rise as inflation bites. And for people with a medical condition they can pay more than a pension in drawdown.

In my opinion, anyone who doesn't at least consider the annuity option for at least some of their post-retirement income should have their head examined.

[TommoPhysicist]

Some inaccurate and misleading information there.

The maximum amount of income that may be drawn is 100% of the single life annuity that somebody of the same sex and age could purchase based on Government Actuary's Department rates. In other words, a pension in income drawdown can only pay out as much as an equivalent annuity. In practice, this is determined by 15 year gilt rates and one's age. At age 55 you can only withdraw 4.3% per annum - not 8%. You currently have to be over 75 to withdraw 8%.

You will need to pass this information on to my pension management company.

I seem to have been taking 6% a year from age 55.