april 12, 2012 03:14pm

Abolition of Protected Rights

6th April 2012 saw the end of ‘Contracting-out’ of the state second pension (S2P), and with it, the abolition of Protected Rights for new contracts.

Protected Rights funds occurred when pension savers contracted out of SERPS or the State Second Pension and were very common. Often they made up significant chunks of individuals’ pension funds.

There were restrictions about how Protected Rights funds could be used when it came to retire and receive benefits, including a mandatory 50% dependant’s benefit on death if the person was married or in a Civil Partnership, a maximum 5 year guarantee period and the income had to be calculated using unisex rates.

Of course, many people found the restrictions meant they had to buy an annuity where the options were not as they wanted and removing them allows more flexibility for people to choose exactly which options they want. For example, many people would have preferred to provide a spouse’s pension at 100% but were limited to 50%, or have no spouse’s pension where their spouse had sufficient income or a much shorter life expectancy.

However, there is now a risk that people will buy an annuity without a spouse’s pension at all where in fact it may be what is more appropriate for their circumstances.

The greater flexibility and simplification is widely regarded as a good thing, but it’s now even more important for people to be clear on what they need for their circumstances and to consider all of the options before making a decision.

At WhoPaysMost.com, we offer no obligation information and guidance to allow people to decide what suits them best.

Posted By: WhoPaysMost

february 07, 2012 11:01am

'Fair and transparent'...

There has been a lot of press recently surrounding the report by the National Association of Pension Funds which branded annuity selling as 'unfair and opaque' (http://www.bbc.co.uk/news/business-16873806) and estimated that half a million retirees are missing out on as much as £1bn in future pension income because of issues with how pension providers behave towards and communicate with those about to retire.

The report by the NAPF highlights a number of issues when it comes to securing an annuity income and talks about ‘obstacles’ that stop people shopping around. One of these obstacles was described as retirees’ difficulties in obtaining useful information and guidance when approaching their retirement date if they have a ‘small’ fund.

A ‘small’ fund is widely regarded as a fund of £50,000 or below, which is, in fact a substantial amount of money. Because of the costs of advice involved, many people do not seek any kind of professional help or guidance and may simply ‘default’ into the annuity offered by the pension provider.

In so many cases, this means that the retiree ends up with an income lower than they could have achieved if they had utilised the Open Market Option and shopped around.

WhoPaysMost.com specialises in offering guidance to all retirees, including those with smaller pension funds, which makes up the vast majority of those about to retire, and do not charge the client a fee as we are paid commission by the chosen annuity provider instead.

On average, retirees using the WhoPaysMost.com service can get 19% more than their pension provider is offering them, which can be worth thousands of pounds during retirement.

Our panel of leading annuity providers is made up of a number of specialist enhanced annuity providers alongside the standard providers. We take into account all lifestyle and medical information, which can mean the client gets even more income through an enhanced rate annuity; something which many pension providers simply don’t offer.

Another obstacle described in the NAPF report was that few people knew enough about annuities to be able to choose with certainty. WhoPaysMost.com offer factual information and guidance about annuities so clients are able to make an informed choice.

It can sometimes seem like a minefield and it’s easy to see why people feel the easy option is to buy an annuity from their pension provider. Those about to retire simply have to call our freephone number and we can give them information and guide them through their options. We will then search our panel of providers and present the results to them so they can choose what suits them best.

Posted By: WhoPaysMost

march 16, 2011 12:00pm

Insurance goes unisex

On 1 March 2011 The European Court of Justice (ECJ) ruled that insurers are no longer allowed to use gender as a basis for calculating premiums.

When it comes to annuities, it means that male annuity rates will inevitably fall and female annuity rates will increase, although it’s unlikely they will meet in the middle. The costs involved in making these changes will undoubtedly mean that the providers will recover some by setting a rate just below the middle somewhere. All other insurance products are affected by this ruling too, which many commentators predict will mean some prices rising as the way premiums are worked out changes.

With annuities, gender is used as one pricing factor among many, which include age, lifestyle and medical information. Gender is used in annuity pricing due to life expectancy statistics.

These statistics show that women live longer than men and so men, as a rule receive higher annuity rates. In future however, this could change as one unisex rate is applied. This new decision takes effect from 21 December 2012, and is likely to mean that annuity providers will have to review their pricing policies and where possible find more detailed and complex pricing strategies to try and ensure their risk is minimised while remaining competitive.

What it does mean is that men and married couples in particular are likely to have to make their money work even harder in retirement by and ensure they are getting a good annuity rate. It’s never been more relevant to use the www.WhoPaysMost.com guidance service to help you consider a number of alternatives from their panel of annuity providers.

Posted By: WhoPaysMost

february 17, 2011 11:35am

Why are more pensioners working?

As we were getting ready to launch WhoPaysMost.com the Office for National Statistics (ONS)
(http://www.statistics.gov.uk/pdfdir/pt0211.pdf) released figures which showed that employment rates for pensioners have risen in 2010 with more of them working part time than ever before. While the ONS does not offer an explanation as to why – we’re sure the fact that their retirement income is not going as far as people expected it to is partly responsible.

Rising inflation, low interest rates and price hikes in fuel and food have especially hit people on retired incomes and they have to make their money work a lot harder.

So like me you might find it staggering to learn that thousands of people could be missing out on a higher retirement income simply because they don’t shop around at retirement time.

This is crazy when you consider that an annuity (the regular income from your pension) may have to last 30 years or more. WhoPaysMost.com has been established to provide a service to all those people who for one reason or another fall through the net when it comes to shopping around.

Most people shop around for their car insurance, home insurance and to get the best deals on holidays and so our mission at WhoPaysMost.com is to get people approaching retirement to do the same for their pension. We’ll keep you posted about how we get on.

Posted By: WhoPaysMost

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