Craig Mcconnon - More People Taking Advantage of Pension Freedoms


It has been revealed that more people are taking advantage of the pension freedoms being offered in the United Kingdom as Britain's annuity market faces certain death. This is based on experts who have used official figures released on 8 September 2017 as sales continue to drop.

Pension Shackles

It has been more than two years since George Osborne released pension shackles and the number of people who are accessing lump sums is on a steady rise. The Financial Conduct Authority (FCA) recently released a six month data report revealing the new trend.

There was a nine percent increase in the number of pension pots being accessed for the very first time and the new draw down arrangements were increased by four percent. The concern is that annuity sales have dropped dramatically by a staggering sixteen percent in six months, which is a sign of concern.

Investors Not Taking Advantage of Guaranteed Outcomes

The data showed that draw down demands are outstripping annuities by three to one, which is worrying statistics. It is also a sign that investors are not invested in guaranteed outcomes with the low interest rates being offered today. If this continues our annuity market in the UK may not exist moving forward, something we need to look closely at to identify how to rectify the situation without delay.

For those older residents that don't have a guaranteed income is a serious concern. The data did show us how people are using their pension freedoms and while annuity sales continue to decline even with low interest rates, draw downs continue to soar due to the flexibility that they provide.

It is important to remember that you can change your provider at any time, but it’s important to also bear in mind that buying annuities is a once and decided decision. The good news is that it does show that people are using the freedoms provided in a sensible manner.

Advice


We do recommend that anyone thinking of taking advantage of their pension freedoms should discuss the options with their financial advisor. It is important to know of any penalties and charges which may be applied to reduce the risk of the person finding themselves losing money in the long run.

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