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Pensions policy in the UK has become remarkably incoherent. We are bombarded with pension reforms, but the ones that have tipped us into Wonderland are the last two. First, so-called ‘pension freedoms’ announced last year, and coming into force in a couple of weeks, where people can cash in the whole of their pension pots and spend them at will. Second, to be announced in the budget on Wednesday, that anyone who has an existing annuity – somewhere between 5 and 6 million people – will be able to sell it in a new secondary market, for a lump sum, which they can spend at will.

Now behavioural economists and sociologists will tell you that when faced with what seems a large lump sum today, compared with a small income stream in future, people have all sorts of competing things going on in their lives and their…

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