Skip to the content

Individual Clients Workplace Pensions Professional Advisers

Annuity and Drawdown Blog

I write extensively about retirement income matters and am often quoted in the national press and sometimes appear on the radio or TV.

In addition to my blogs, you might me interetsed in my comments and aticles in the national and trade press.

There is clearly a national state of emergency, but there is also a financial emergency for those approaching retirement with a money purchase pension and the over 70’s who are at high risk of suffering the worst effects of Covid 19.

As the well-known pension commentator Henry Tapper wrote: “pensions are about people’s lives and older people are living in particular fear right now". Justin Cash, editor of Money Marketing, tweeted; "We have all been caught with our pants down: @BillyBurrows on lessons for IFAs from the #coronacrisis”.

I understand the continuing volatility in the stock market is worrying for you all those invested in equity portfolios and I have written individual emails to my clients reviewing their pension plans It is only natural be concerned and in order to help you better understand the key issues at these unprecedented times I am sharing the contents of an email from Aberdeen Standard ...

The health consequences of coronavirus for the over 70’s are well known but most people at this age will not be aware of the financial consequences if the virus was to impact on them directly.

Even without the threat to life from coronavirus, everybody should make sure they have:

  • A valid or up to date will
  • Registered a lasting power of attorney
  • Consider a pre-arranged funeral plans

These are sensitive but important matters which is why we encourage the immediate family to get involved especially as they are the ones who will be directly affected if the worst was to happen.

It is not just equity prices which have fallen as a result of the financial fallout of the global coronavirus epidemic, annuity rates have crashed as well. As a result annuity rates have fallen by 7% since the beginning of the year.

Falling gilt yields

Annuity rates are priced with reference to the yields on long term fixed interest investments such as gilts and corporate bonds.

The benchmark gilt yield (15 year gilt as quoted in the FT) has fallen through the floor. At the beginning of 2020 the benchmark gilt yield was just over 1% but recently it fell to 0.4% which is the lowest level since I started recording yields 20 years ago.

Gilt yields have fallen as direct result of the flight to quality as investors sell equities and buy secure gilts. As more people buy gilts the price rises but the yield falls.

Retirement advice is important, but many people with workplace pensions may not be getting the advice they need.

In this blog I explain why I think why advice should be more widely available.

I was asked three really good questions last week.

  • What are your thoughts of the effect of the Coronavirus on the global markets ?
  • Do I have to take my tax-free cash in one go?
  • How safe is my pension

Looking ahead at what may happen in pension industry in 2020 I see very few things that will have an immediate impact on advisers or their clients but I do see some policies and initiatives which will result in important changes in the future.

In the December 2010 Queen's Speech, the Government reintroduced pension schemes bill and it mentioned the creation of a legislative framework to allow people to access information for most pension schemes in one place for the first time. Therefore, it seems the Pension Dashboard has become one step nearer but are we are still left waiting to know when and how.

Here are my top tips for 2020 The beginning of a new year is a good time to take stock of your personal finances and to make sure your pensions are in good shape. Be serious about retirement planning and your income needs – there is a lot at stake Follow the Golden Rules of annuities Don’t forget the Golden Rules of drawdown Avoid paying too much tax on lump sums ...

Fixed term income plans pay a guaranteed income for a specific period of time and at the end of the term there is a guaranteed amount paid pack into the plan.

They are a type of drawdown plan which means that income payments are paid directly from the pension fund and the amount of the fund left over after making these payments is paid back to your pension plan

I once had a client who said: “Give me a one-handed adviser”. He went on to explain that I kept on saying ‘on the one hand this and other hand that’, but he just wanted the answer.

I understood his frustration but as soon as I explained there was not one right answer and it was important to consider both sides of the argument he was happy with my two-handed approach.

William Burrows

Offices in London, Northampton and Cardiff

Call: 07730 435 657

 

William Burrows / Retirement Intelligence Ltd
International House
24 Holborn Viaduct
London
EC1A 2BN
Better Retirement
400 Pavilion Drive
Northampton
NN4 7PA 

If you need help or advice - Contact us

As one of the most respected specialist retirement advisers, William Burrows and Better Retirement will be pleased to help you make the right decisions at any stage of your retirement journey.

Call or email now for a free and without commitment chat.

This website is run by William Burrows and publishes generic information on annuities, drawdown and other related retirement income matters. Any information you use is at your own risk and does not constitute financial advice.

If you require financial advice you will be advised by Better Retirement where William Burrows is authorised to give investment advice. Better Retirement Group Ltd is authorised and regulated by the Financial Conduct Authority, reference number 153420.