Over 55s being refused access to pension cash already.

[Janus]

It’s always easy to pay cash in to any institution, but it can often prove more difficult to withdraw it. It’s only day two of government legislation that allows over 55 year olds to access their pension pots, and problems gaining access is being experienced by some.

http://www.bbc.co.uk/news/business-32201833

[Anna B]

I'm very suspicious of why the Tories have done this.

 

We all know that the banking system is in a mess and pension funds probably unable to cover their committments, so is it a case of, 'let them have their money back then fend for themselves.?'

 

As usual the thing doesn't seem to have been properly thought through and the advice that was supposed to be in place is a shambles. It's also been a disaster in other countries that have tried it.

 

Most people's pension pots will not be that big and certainly not large enough to last very long. The long term results of this legislation won't be felt until this government are long gone.

[woodmally]

I just think this is a licence for stupid people. Why would people want to take all or some of their pension money out early. Its taxed anyhow. Why not retire normally like the rest of us and draw on a pension.

[I1L2T3]

I'm very suspicious of why the Tories have done this.

 

We all know that the banking system is in a mess and pension funds probably unable to cover their committments, so is it a case of, 'let them have their money back then fend for themselves.?'

 

As usual the thing doesn't seem to have been properly thought through and the advice that was supposed to be in place is a shambles. It's also been a disaster in other countries that have tried it.

 

Most people's pension pots will not be that big and certainly not large enough to last very long. The long term results of this legislation won't be felt until this government are long gone.

 

The upshot is that many people will end up with no private pension provision at all and will become completely reliant on the state in retirement.

 

Its a very ideologically driven policy which empowers people. In some ways it is good to allow people to break free from being locked into annuities but the whole policy relies on people being smart enough to realise that opportunity. And a lot of people just aren't smart enough.

[loraward]

I just think this is a licence for stupid people. Why would people want to take all or some of their pension money out early. Its taxed anyhow. Why not retire normally like the rest of us and draw on a pension.

 

Some people only have a very small pension pot and would find a lump sum more useful than a tiny yearly pension. A £20,000 pot would give you less than a £1000 a year, if you have credit card debts of £20,000 then paying that off with all your pot is far better than taking a yearly income.

 

Paying off larger debt such as a Morganne could be more beneficial than taking a regular income.

 

Annuity rates dive towards all-time low.

The level of guaranteed income that savers can get in return for their pension pots has been shrinking over the past 10 years

The best annuity deal on the market today will allow a healthy 65-year-old to swap £100,000 of pension savings for a fixed income of £5,456 a year for the rest of their life.

 

To pay off a £100,000 debt/mortgage over 10 years at 5% interest would require a repayment of £1061 a month which is over double the income from the pension, so using the pension to pay it off all at once saves you £606 a month.

Edited April 8, 2015 by loraward

[Eater Sundae]

The upshot is that many people will end up with no private pension provision at all and will become completely reliant on the state in retirement.

 

Its a very ideologically driven policy which empowers people. In some ways it is good to allow people to break free from being locked into annuities but the whole policy relies on people being smart enough to realise that opportunity. And a lot of people just aren't smart enough.

 

There was someone on the radio, a couple of days ago, in effect saying that if someone withdraws their money and blows it or loses it through bad investments, then they have, in effect, purposely made themselves poor (as they could have sat back and received a pension), and so the state can/will refuse to support them. The state sees it the same as someone handing over all their assets to their children and then claiming poverty.

 

I don't know how true or accurate this is. it was just a random person on the radio who claimed to know it as a fact.

[Berberis]

There was someone on the radio, a couple of days ago, in effect saying that if someone withdraws their money and blows it or loses it through bad investments, then they have, in effect, purposely made themselves poor (as they could have sat back and received a pension), and so the state can/will refuse to support them. The state sees it the same as someone handing over all their assets to their children and then claiming poverty.

 

I don't know how true or accurate this is. it was just a random person on the radio who claimed to know it as a fact.

 

Isn't there a 7 year deal with these though in the same way as inheritance tax?

[buddysbuddy]

my thought on this is -- how long before we have the " claim lawyers" advertising for were you wrongly advised on your pension pot? can anyone else see a recurrence of the mis selling of p.p.i. and the likes surfacing?

[geared]

I'm very suspicious of why the Tories have done this.

 

We all know that the banking system is in a mess and pension funds probably unable to cover their committments, so is it a case of, 'let them have their money back then fend for themselves.?'

 

Whereas if Labour had brought it in, it would be seen as 'Liberating peoples hard earned money from Greedy financial institutions' ?????

 

I don't argue that some people are going to waste it, some will blow it all on rubbish, piddle it up the wall or give the lot into dodgy investments.

 

but it's just giving people access to their own saved money - you can't control people for ever, at some point you've got to let them make their own choices.

If you can't sensibly control your money into your 50's then it's a miracle you've made it this far in the first place.

[Chris_Sleeps]

It is permissive legislation. Not all pension providers will be abe or willing to offer certain options.

 

People however do have the right to move their money to a Pension Provider that can offer the services they desire.

 

--------------

 

Some people only have a very small pension pot and would find a lump sum more useful than a tiny yearly pension. A £20,000 pot would give you less than a £1000 a year, if you have credit card debts of £20,000 then paying that off with all your pot is far better than taking a yearly income.

That depends on if the tax you'd pay is higer or lower than the APR of the debt. But, you've got an outline of one scenario.

 

Equally though, what are people then going to live on when they reach old age if they've paid off debt/mortgage with their pension money?

Edited April 8, 2015 by Chris_Sleeps