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Confusion over annuity reforms

Confusion over annuity reforms

Category: Annuities

Updated: 28/04/2015
First Published: 28/04/2015

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

How well do you understand the pension reforms? If you're approaching retirement you're hopefully starting to get a handle on things, but unfortunately many people aren't yet familiar with the reforms that have taken place, and those that are still in the proposal stage.

Confusion reigns

Feedback from Portal Financial in the immediate aftermath of the reforms revealed a clear spike in the number of customers making enquiries regarding their pension, particularly when it came to their annuity. Just one day after the new rules took effect, the firm recorded a 62.5% uplift in the number of incoming calls compared with a standard Monday.

However, a particularly notable increase was in the number of customers looking to sell their annuity, despite the fact that such an option isn't yet available. George Osborne had previously announced plans that will allow the exchange of annuities for cash, but this is still only a suggestion of future reforms, and isn't taking immediate effect. This is just one example of a large number of cases where people have misunderstood the new freedoms, said Portal Financial, and how the new rules affect their retirement plans.

Jamie Smith-Thompson, managing director of the pension advisory specialists, commented: "Our advisers have reported an overall increase in call volume with a number of people actively trying to sell their annuity. I believe that lots of changes to pensions made very quickly have led to confusion, and people are not clear on what their options are."

Understand your options

This is why it's so important to make sure you're fully informed. It's the only way to be confident that you're making the right decisions when it comes to your retirement income, and with more possibilities than ever, it's time to get in the know.

Find the key things you need to know about the reforms and read our guide on the risks associated with them so you don't jump into anything lightly, and make sure to contact Pension Wise to get a thorough overview of your options. Of course, this shouldn't come at the expense of professional financial advice, but if you conduct your own research beforehand, you hopefully won't be confused for much longer.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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