Would you be prepared to pay more for pensions flexibility?
That is a question that pension savers may be asked to consider in future if pensions minister Steve Webb’s plans come to fruition.by Andy McLaughlin, Astute Wealth Management
He has suggested that pensioners should have the flexibility to change their annuity provider every few years in the same way that homeowners can switch mortgage providers.On the face of it, this seems like a very good idea, as at the moment, buying an annuity is a once in a lifetime event, yet it is completely dependent on the annuity rates available at the time.
So the concept of being able to switch providers & not be locked in for the rest of your life does seem very attractive, particularly if your circumstances change in a way that means you may be able to receive an improved rate.However annuity providers are warning that this flexibility is likely to come at a price, & may mean that annuity pay-outs reduce for some people who have yet to retire. As choosing your pension annuity is one of the key financial decisions most people will make in their lives, we recommend that you seek independent financial advice from an expert early on.