Farmer Giles Osborne putting the cat among the annuity pigeons
There has been time for the UK domestic and international financial community to reflect on Farmer Giles Osborne putting the cat among the annuity pigeons, or letting his fox loose in the hen coop or whatever it is he has done, the one thing we can reflect on with certainty is that feathers have been ruffled. Ruffled more than through any proposed legislation in perhaps the last 100 years, and coming at a time when no one was expecting any ruffling.
If, as it claims, the FCA, did not know of these annuity proposals, then we lesser mortals never really stood a chance.
Responses from informal meetings of the GWM Water Cooler Committee (WCC) grudgingly accept that the Chancellor might just have pulled off a political masterstroke. He has appeared to empower people by giving them access to their own money, he will encourage spending and get his hands on a very tasty 40% or 45%of the taxable pension pots taken as lump sums. And it hasn’t cost him a penny. Brilliant – he should be in politics.
Those among the financial community who are of the Mary Poppins persuasion appear aghast that the over 55’s will be able to withdraw the whole of their defined contribution fund in one go if they wish (25% tax free with the excess subject to income tax) or invest it in an unconstrained drawdown product.
From March 2014, the minimum requirement for a flexible drawdown will be reduced to £12,000, and from April 2015 there will no longer be a requirement to have a minimum at all. There are Inheritance Tax issues to consider as well because if the pension fund is taken and not spent the residue will be deemed to be part of the deceased’s estate and the taxman may be looking at getting his hands on a further 40%. GAD rates will also be increased from 120% to 150% from 27th March 2014.
If the state is not going to nanny savers, then the message that rings through very loudly and very clearly is that the need for expert financial advice has never been greater.
It is not just about the big boys..
Anyone who has a small pension pot can take the whole amount as, and if, each pot is valued at £10,000 or less. Three such pensions can be encashed giving a value of £30,000.
If you would like to know more about how the changes may affect you and your pension, please complete the request form below.
Drowning your sorrows..
The WCC observed that mention on the GWM web site concerning those people who may be returning to the UK and are looking forward to some British beer may have appeared to encourage a bibulous leaning. George Osborne has been most generous and has cut 1p off the price of a pint, or half a penny on a half pint as we are encouraging moderation. Getting our slide rules out we now discover that at London prices, after your first 798 half pints of beer, Generous George will buy the next couple. Cheers George – you should be in politics.