Jeremy Phelps, Chartered Financial Planner at Financial Solutions Wales writes to tell you about a significant change to pensions that could affect your income in retirement.
On retirement, many people will use all or some of their accumulated pension fund to purchase an annuity. This provides them with a guaranteed pension for life. The amount they receive depends on several factors, including how long they are likely to live.
On 21 December 2012, the EU Gender Directive comes into force for individual pensions. From this date, annuity providers will no longer be able to offer different pension rates for men and women. Traditionally, men have received a higher annual annuity income than women, due to their lower life expectancy. This will not be the case in future. The new Directive is likely to reduce the pension income of men retiring after 20 December this year.
What this could mean for men due to retire:
It is estimated by leading annuity provider Partnership Assurance that male annuities will be reduced on average by 2% to 4% . This could directly affect men (and their spouse or partner, if it is planned to take out a joint life annuity).
How seeking Independent Financial Advice can help
At a time of historically low annuity rates, it is essential that retirees receive the maximum pension available – but annuities can vary widely, and your current pension company may not offer the best deal.
Ask your local financial adviser to search the entire market, review all the options and recommend the most suitable annuity for you.
Help keep news FREE for our readers
Supporting your local community newspaper/online news outlet is crucial now more than ever. If you believe in independent journalism, then consider making a valuable contribution by making a one-time or monthly donation. We operate in rural areas where providing unbiased news can be challenging. Read More About Supporting The West Wales Chronicle
