Saturday, March 22, 2014

Pension Rights - UK Government Budget 2014

Despite the rather tame title to this blog post  it was good to learn through the dull sounding but in fact radical, announcement  by the Chancellor in his budget on Thursday,   that pension savings by individuals in the UK may in future be invested and/or spent by the individuals as they please, rather than compulsorily being dealt with by profit making annuity companies.

The announcement by the Chancellor  seems to have surprised many - the commercial pension companies, the Labour opposition and especially the prospective pensioners.

 However the UK appears to have been rather slow in  allowing individual pension savers to access their own cash in this way.  I gather for example  that  Australia decided to trust its  people with their own pension savings some years ago whereas the UK government gave  control over people's retirement savings  to companies as long ago as the 1920s and until now did not trust its people with investing or spending a good proportion of  their own pensions savings as they chose.

Despite the delay however  it is good to learn the that the  UK government has finally decided that the older section of the population has at last grown up.

Of course the commercial pension companies are not being put out of business by government decree. Rather they will now have to come up with some  new ways to  enable pension savers to reap better benefits of their years of  saving than they are currently doing.

The radical  for the UK at least, change does not take effect until 2015 so the commercial pension companies will need to put their thinking caps on and act fast if they wish to persuade savers to use their services.

Currently apart from being able to switch from one pension company to another for the pension annuity, commercial companies rather than  individual savers hold the initiative. In future the initiative will rest with the individual savers.

Power to the People.

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