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(Reuters) - British Chancellor George Osborne will allow pensioners to cash in annuities in exchange for lump sums in his annual budget next week, British newspapers reported, in a move designed to woo voters before a May national election.
The measures are an extension of pension reforms announced last year, which eased requirements on people to buy annuities as part of their pension.
The election on May 7 is shaping up to be the most unpredictable in decades, with anti-establishment parties gaining support at the expense of Prime Minister David Cameron's Conservative Party and the opposition Labour party.
While Osborne's focus on reducing Britain's large budget deficit means he is unlikely to offer any major giveaways in Wednesday's budget, allowing pensioners to cash in their annuities will likely appeal to older voters who are more likely to vote Conservative.
The measure will be introduced in 2016, according to newspapers due to be published on Sunday.
The measures are an extension of pension reforms announced last year, which eased requirements on people to buy annuities as part of their pension.
The election on May 7 is shaping up to be the most unpredictable in decades, with anti-establishment parties gaining support at the expense of Prime Minister David Cameron's Conservative Party and the opposition Labour party.
While Osborne's focus on reducing Britain's large budget deficit means he is unlikely to offer any major giveaways in Wednesday's budget, allowing pensioners to cash in their annuities will likely appeal to older voters who are more likely to vote Conservative.
The measure will be introduced in 2016, according to newspapers due to be published on Sunday.
Why is this going to be a disaster?
1- Without fail, every deregulation in UK financial services for the consumer market results in a mis-selling plague that surfaces about a decade down the line, because the de-regulation is rushed in by politicians before the supporting risk management framework is in place. See personal pensions, low-cost endowments etc etc.
2- The financial services companies are already stretched hard by the removal of the need to buy annuities from this year. They are having to recruit loads of temps to cover it. Temps are useless and make loads of mistakes. Next year it will be even worse.
3- This move only makes financial sense for people whose life expectancy has significantly reduced since retirement. And that's not the norm, because we're living longer. Cue lots of people claiming benefits years down the line.
4- It's a political decision, not a financial one. It's trying to buy the grey vote for the election. Politics really should be kept out of this.
5- Every single Risk Manager in the sector thinks this is a terrible idea, but some Financial managers approve. If you care more about people than profits, that's a bad sign.
Bookmark this thread, and come back in 2025 to go "Yep- Bugs was right".
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