The Irish government’s plan to allow retirees to defer taking their pension annuity is ‘inept’, says an industry body. Measures announced last month by them to allow people to defer taking a retirement annuity for two years have been slammed as inept by the Irish Brokers’ Association (IBA). They said the measure lacked any credibility and was not properly thought out.
Workers nearing retirement who decide to delay taking out a pension annuity will end up making their pensions situation worse over the two-year period, stated the IBA. Those individuals with defined contribution pensions have no choice but to buy a pension annuity to provide their retirement income when they retire. The recent decision by the Irish government has now given them two years after retirement to decide when to buy their annuity.
The IBA stated further that falling interest rates would mean that annuity rates were likely to fall more over the next two years, while anyone who was retiring and continuing to invest their defined contribution fund in falling stockmarkets would be exposing themselves to inappropriately high risks.
A call was made for people with defined pensions to be allowed to invest in Approved Retirement Funds (ARF). This is where a pension fund can be kept invested in the markets instead of having to use the funds to buy a pension annuity. Only those who are self-employed and people who have Personal Retirement Savings Accounts (PRSA) or additional voluntary contributions (avc’s) can transfer their pension funds into ARFs.
Whether in Ireland or not, there are other pension options available instead of buying a pension annuity.
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