J.G Enriquez Aug 20th, 2010
Retirees who sell their endowment policies may lessen the impact to their incomes brought by changes to the pension system.
These people can generate enough cash by selling the policies to maintain their current lifestyles.
The government plans to change how it measures inflation used to calculate pension payments in the private sector, from the retail price index to the consumer price index.
Steve Web, UK pensions minister, announced the amendments to the pension system last week as part of a larger effort to revamp the system
This move by the government can reduce the funding received by retirees, according to Keith Churchouse, director of Churchouse Financial Planning.
AAP, UK’s largest buyer of endowment policies, announced that some customers who foresee that their retirement funds may take a hit have already planned to sell their underperforming policies, according to its CEO, Chris Radford.
Churchouse said that the changes might not seem evident while these people are working but they will feel a “huge difference” as soon as they retire from the work force.
“It is something that individual people will really need to start paying attention to early, because the reality is that they’re going to see the purchasing benefits of their pensions going down over time,” Churchouse said.
That difference of half a percent or one percent may seem small enough at the onset but can be significant in the long-term since people are living longer and may even have to rely on up to 20 years’ worth of pension payments.
Selling endowment policies may be a viable solution for future retirees to make now in order to minimize their overreliance on their pension funds.
From Seer Press News published on Aug 20th, 2010
