UK state pension changes and missold annuities to leave widows in penury

Published:  31 Jan at 6 PM
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UK financial regulators are closing their eyes to the plight of widows after the projected state pension changes in 2016.

Hundreds of thousands of women are being condemned to die in abject poverty due to state pension changes and the actions of unprincipled FAs who fail to advise correctly on annuities. The City is fully aware of the as yet concealed multi-billion pound scandal which makes millions annually for insurance companies, and the financial watchdog is doing nothing about it.

When questioned recently, the Financial Conduct Authority’s spokesperson muttered something about consultations later in 2014. Little is expected to be publicised in the public domain before April 2016, when pensions for women reaching retirement will no longer be based on NI contributions by their husbands.

Annuities, touted by FAs as being the answer to regular income via occupational pension funds until death, are being sold without the explanation that, unless a lower amount is taken per month, the remainder of the sum invested passes to the insurance company on the holders’ death, leaving his widow with nothing. Commissions to FAs are higher if a single life is insured, leading to many advisors ‘forgetting’ to discuss the facts of the matter with their clients.

Unlike most investements, after a set cooling off period, annuity purchase is irrevocable, and a maximum of 25 per cent of the total sum is allowable in cash. The rest is used to invest in the annuity, with less than half of retirees purchasing annuities a joint-life basis thus ensuring a continuing pension for their widows.

If the annuity is purchased direct from an insurer, almost all men buy single-life cover. Insurance companies insist they provide spouse protection, but this nothing but a five-year guarantee. Ethical annuity advisors insist their married clients sign a declaration stating that death benefits have been discussed with the partner, and expats in particular are advised to only use firms which give comparable joint and single life quotes.
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