For all matters of personal finance 2009 is not expected to be an easy year. It is very likely that when it comes to the subject of pensions and annuities that there will be cuts in contributions and scaled-back pension schemes.
2008 can be seen as the year that stockmarkets around the world hit the buffers, and 2009 is going to be the year when the real economy we live with day to day finally realises it has run off the cliff edge and starts falling.
The financial services, construction and retail sectors have all suffered sharp reversals recently, resulting in a contracting economy and job losses. We now have to go through the very slow process of de-leveraging, paying off debts and adjusting to the new reality.
As to pension provision, expect to see declining pension contributions; employers announcing pension scheme restructuring to reduce costs; and more people delaying retirement or to retiring on a lower annuity income than they had been planning for.
Unfortunately, it is likely that pension annuity rates are going to keep heading down throughout 2009.
We might with any luck see some movement from the government regarding how pension benefits are paid out from age 75, i.e. a change in the requirement to buy a pension annuity by that age.
2009 could therefore be a very difficult year financially, and there will be many facing redundancy. However, people will still want to retire and on the best terms available to them, and there will still be some pension options in the market which will be worth taking up.
I heard that if you want to take any lump sum from an annuity, that it had better be before October 2009 because after that date there will not be enough money to back the ins co and therefore you will only be able to get 50% of what the annunity is worth. Is that so?