Many years left for annuities, says retirement planning expert

A retirement planning expert has said it is premature to believe that the overhaul in the pensions system means the the death of annuities. Chancellor George Osborne's announcement in last month's Budget rocked the industry leading to commentators to speculate on whether the annuity had a future still.The changes when they were announced hit share prices on leading firms in the sector.This week a report by PWC predicted a 75% decline in the UK annuities market.However, Andy James, head of retirement planning at Towry, said: "The welcome, if unexpected, announcements regarding the potential increased flexibility of pension income in the future has been heralded as the death of annuities."This, to me, seems a little premature as they will still have a place in the market for many years to come."For those who either do not have the risk tolerance to maintain investments into later life and prefer a greater level of certainty, or simply do not have sufficient funds invested to make drawing income directly out of their pension cost effective, an annuity will likely still be the best option.{desktop}{/desktop}{mobile}{/mobile}"There is no doubt that with the increase in smaller pension pots and the rise in triviality limits – taking a pension as a cash lump sum – the lower end of the market may disappear for annuity providers, but this was probably not that cost-effective for them anyway."He siad the added flexibility given to retirees must come with extra responsibility.He said: "Just because you could take all your money out of your pension doesn't mean that you should."Cashflow forecasting, which takes someone through their whole life expectancy, should be a must when reviewing any plans. From this it will be possible to ascertain, with reasonable confidence, a suitable level of withdrawal and thus ensure that hard earned savings outlive their owner - but not by too much."

Many years left for annuities, says retirement planning expert

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