View more on these topics

‘Inflation could slash pensions’

Pensioners risk their income being eroded if they do not take steps to guard against inflation.

The removal of obligatory indexing on defined-contribution company pensions has been broadly welcomed but there are concerns that people may underestimate the impact of inflation on their income.

Intelligent Pensions tech-nical manager David Trenner says the average male retiring at 60 has a 23-year life expectancy and, without inflation-proofing, his income will halve over this period if inflationis 3 per cent. Trenner says: “We know that the average person underestimates their life expectancy by up to a quarter and if you have a decent pension you do not want to erode the value.”

But inflation-proofing reduces income by a third so Trenner says many people are reluctant to take it up.

The Annuity Bureau managing director Peter Quinton says an alternative is to ditch inflation-proofing and take the highest possible income, then use equity release to boost income later. Quinton says: “If you are prepared to take risks, some form of investment-linked annuity is worth considering. Whatever you decide, you only get one shot at this.”

Recommended

FSA assurance on confidentiality

In the Money Marketing article headlined, FSA aims to boost its service standards, you report that IFAs have questioned the confidentiality of the questionnaire which will be held by NOP, the marketing agency we have appointed. I can assure MM readers that NOP will not be giving us the names of the firms which respond. […]

Genesis Home Loans uses Exweb for protection sales

The Exchange announces Genesis Home Loans has selected the Exweb Broker portal to support its new arrangements for the sale of protection products. Exweb Broker will help Genesis manage its relationships with providers and enable its members to submit new business applications electronically for a range of protection products. Exweb Broker is a tailored version […]

Bates builds a top-floor fund

Bates last year left Bates Investment Services, the IFA firm which he founded. He has amassed a personal property portfolio of 10m by investing in his speciality, North of England property, and is offering IFAs’ clients the opportunity to share in his expertise and exploit a 40 per cent tax break by investing in the Keydata resid- ential property limited partnership.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment