InTouch Magazine Articles Archive

Issue 16, March 2008

Stop &Think Again

By Paul Clayfield.

It has long been my conviction that the annuity pension trap should be exposed as the scam it is. If I didn’t know better I would have thought that the purchase of annuities for pensions had been dreamed up by one of those not so literate Nigerian gentlemen perpetrating yet another email scam. It is however a product of our beloved British government.

Here is how it works. You save your hard earned cash for years and years and years until you retire. You do this because you don’t want to be a burden to the government or your family. When you retire the government has decreed that you must buy an annuity with at least 75% of the fund. This is called a compulsory purchased annuity.
The nice man at the annuity company takes your money and buys long gilts, which are long-term interest bearing government bonds. He then takes his cut and gives you the rest of the interest as a pension income. When you die he pockets the money and everyone is happy. Or are they?

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