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What advisers are saying: Annuities – a decisive blow or a good kick up the proverbial

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Well this caught everyone by surprise! 

“No caps. No drawdown limits. Let me be clear: no one will have to buy an annuity.”

Well At around 1.20pm on 19 March, George Osborne, in the words of some commentators, in a few short minutes “killed the annuities market”. This might (definitely!) be a bit of an exaggeration but the impact was significant and immediate.

Those firms that only sell annuities were worst hit, with enhanced annuities specialist Partnership experiencing panic selling that saw its share price plummet 55 per cent and its value drop £700m. Just Retirement lost a third of its value in a £529m sell-off.

Larger life firms were hit too: Legal and General lost a staggering £1.1bn, Prudential £700m, Aviva £550m, Standard Life £260m and Friends Life-owner Resolution £230m.

The truth is that things will more than likely calm down, pleasing the late Michael Winner as well as the affected providers.

Punters with larger retirement pots may well take a bit more in cash than previously but the bigger and lasting change is expected among those with pension assets of less than £50,000. Would you take £150 to £200 a month or £40,000 now?

With 47 per cent of advisers’ total client bases having pensions assets under £100,000, the tremors will be unavoidable for standard annuity sales. But the trend towards blended retirement solutions (and consideration of all assets) was well underway before the budget with most advisers openly questioning the value and appropriateness of conventional annuities for many clients.

We will be sharing the fallout from our Retirement (R)evolution research in the coming weeks in your favourite trade rag but here are a few things to remember when everything (seemingly) goes wrong:

1. Pain is part of growing: Sometimes life closes doors because it’s time to move forward (And that’s a good thing because we often won’t move unless circumstances force us to).

2. Everything in life is temporary: Every time it rains, it stops raining.

3. Every moment gives you a new beginning and a new ending: Make the best of both.

4. Worrying and complaining changes nothing: Those who complain the most, accomplish the least. Take action instead.

5. Other people’s negativity is not your problem: People are going to talk regardless of what you do or how well you do it. So worry about yourself before you worry about what others think.

Phil Wickenden is managing director of So Here’s The Plan phil@soherestheplan.co.uk

IFA quotes from our Retirement (R)evolution research:

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