Here’s a pension forecast that’s DEFINITELY going to happen, and it’s not good.

by Chris Mansfield · 0 comments

If you’re a UK male, the bad news is that, if you do nothing, your pension annuity is more than likely going to fall before Christmas.

I hate to be the bearer of bad news, but in this instance there’s no choice. If you thought that pensions in the UK couldn’t get any worse, then brace yourself: the pensions forecast for many UK males is that their annuities are about to drop.

If you’re a UK male pension holder, and if you haven’t purchased an annuity by the 21st December, or done something to change your current arrangements, the pension forecast for you is that the amount of income you’re able to get is likely to fall.

The culprit is the “EU Gender Directive”

Under this directive, men, who were previously entitled to higher pension incomes than women, will lose that status and will revert to being on par with women.

Up to the enactment of this directive, the case had always been that men would receive higher annuities because women statistically lived longer, so a woman’s pension income had to stretch over a greater period of time.

Almost without doubt, after December 21st, male pensions will fall.

Some UK annuity providers are now estimating in their pensions forecasts that incomes from pensions taken after the date of the new directive will fall between 3% and 10%, but HM Treasury have suggested that incomes could fall by as much as 13%.

Joint life annuity rates will also be detrimentally affected too, these pay an income to a spouse or a partner on death, and the precise effect is dependent on the amount of spouse’s benefit chosen, and the gender of the person who has bought the annuity.

Is the deadline REALLY the 21st December?

In short: yes. The new directive becomes enacted with effect from midnight on the 21st December. Providers have differing views on precisely where you need to be in the process on that date, some say that you simply need to be in the process of rearranging, others say that you need to have completed. If you ARE sufficiently concerned to want to find out more, I recommend that you don’t waste any time getting hold of your provider.

This is because, what’s most definitely certain, is that if you haven’t enacted alternative arrangements by the 21st December, you’ll be stuck with whatever annuity you’re going to get.

If you DO decide to improve your annuity, how long does it take?

Unfortunately, it can take a number of weeks to set up an annuity. And then the quotes you get are guaranteed for a short period only, usually 14 days. So time is not on your side if you do decide to seek alternative returns.

What are the prospects if you DO make new arrangements?

In a word: better. On the proviso that you move swiftly, and make informed decisions about your annuity, it is highly likely that you can avoid a drop in your pension income.

What should you do now?

If you’re even CONSIDERING making fresh arrangements – I would seriously suggest that you do the following:

    1 Talk IMMEDIATELY to your financial advisor, pension provider or other trusted authority.
    2 Get quotes that will show you the alternative opportunities available.
    3 In the light of that new information – make a decision that COULD elevate your annuity income away from the low pensions forecast under the new directive.
    4 Consider the potential benefits of SIPPs and the consequential opportunities offered by alternative investments.

Is it only me?

I sit here in my office getting all steamed up about the injustices in the world – but maybe I’m the only one that’s worried. (I know Ed and Rob get a tad fretful too – but they’re my business partners, so in this context – they don’t count. Sorry boys).

If this kind of information about pension forecasts and the like, gets you a bit hot under the collar too, or you’ve got any questions that I might be able to help you with – well you know what to do… start typing below…

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