 
ANNUITIES AND RETIREMENT QUOTE FROM THE LORD "IN MY VIEW THERE ARE TWO OVERWHELMING REASONS WHY PEOPLE SHOULD NOT INVEST IN ANNUITIES UNDER ANY CIRCUMSTANCES. THE FIRST IS THAT INVESTING IN ANNUITIES IS CONTRARY TO THE INTERESTS OF A FAMILY. ANNUITIES ARE VIRTUALLY UNIQUE AMONG ALL FORMS OF INVESTMENT IN THAT THEY ARE WORTH NOTHING WHEN THE INVESTOR DIES. THE SECOND REASON IS SIMPLY THAT ANNUITIES ARE A LOUSY FORM OF INVESTMENT."
This may be the first time you have come across this Lord. His comments are straightforward. What options have you at retirement but to give your capital to an insurance company to keep in return for your pension? They keep your capital - so unless you live a very long time in retirement the chances are you lose out. You could keep the pension fund invested and draw an income from the fund (known as pension drawdown). However at 75 you still have to buy an annuity and give the capital to an insurer. At last there is a specialist insurer which will issue an annuity and will forego its right to the residuary capital which will be left over on the death of you or your spouse. The Inland Revenue pension stipulations prevent you or your spouse from enjoying any part of the annuity capital but it can thereby find its way to your next of kin. During your life you can have a say in the fund management or in the manner in which it is delegated. You can reduce the annuity received each year if you wish to reduce your personal tax. The reduction can either be paid to you as a later increase in the annuity or will ultimately be part of the surplus and therefore accumulated with the annuity fund capital. The contract received Inland Revenue approval on 2nd April 1998. We are privileged to be one of very few Independent Financial Advisers in the UK given this information.
Regulated by the Personal Investment Authority |
