Comments on: The great annuity scandal Wed, 16 Nov 2016 01:37:11 +0000 hourly 1 By: Barton Poran Sat, 26 Sep 2009 11:23:33 +0000 In response to Benny Acosta’s comment……

Thank you for such an eloquent and thoughtful statement. I’m sadly in complete agreement. It seems to me that over time our collective standard of living must decline as our economic system eventually balances excesses of the past. As a retired economist and business man I’ve always felt that inflation is the path of least resistance for societies that develop serious economic imbalances.

Since our society today places virtually all it’s emphasis on consumption, it seems that we are unfortunately a very long way from “taking care of each other”. It truely is more like caveat emptor or more to the point “every man for himself”. Sad……

By: Benny Acosta Wed, 23 Sep 2009 15:14:39 +0000 Another good example:

The direct result of the ego seeking to maximize its pleasure by making material gains at the expense of others. It is indeed sad that one who works and saves in the hopes of having a means of support in their elder years, should be cheated out of the comfort and support they worked for in their youth.

Once again it shows how much we need each other. The worker, not skilled in finance trusts the financial “specialists” to conduct business in good faith. Thus earning a profit by benefiting the client. But when people of low conscience control money that is not theirs, there is but one outcome. And that outcome is the subject of this article.

So by nature we need to work together, but by ego we destroy each other and consequently, ourselves. This is not a systemic problem of the financial industry. It’s a systemic problem of the human mind and heart.

One who cannot feel the suffering of his fellow is condemned to live in suffering as well. We each disregard the needs of our brothers and sisters in this place. And we do all we can to take care of ourselves. Unfortunately all of your “friends” are doing and thinking the same things. So even though you are in need of help it won’t come from your friends because they value themselves and their concerns over yours.

But when we begin to value each other we no longer have to worry about ourselves because others are taking care of that for us.

By: David Wed, 23 Sep 2009 08:23:46 +0000 As an erstwhile Rockingam customer I applaud the sentiment of this piece but regret its narrow focus. The financial services industry globally, but particularly in the UK, is “front end loaded” without clawback to a such a degree that it ensures that any real return to the customer is exceptional and not the norm: this has been the subject of many research papers. It is also not attributable to inadequate market returns.

Th graft and “rinky dinks” run from the scandal of the 9 Billion “Inherited estate” retained by Prudential, to the scandal of the negative value added exit charges levied by all the snouts feeding at the trough of a managed investment, to the ridiculous charges for operating the register of members (a statutory requirement) (Santander/Equiniti) if a member wishes to use his or her independent broking facilities, to the foul obscenity of the publicy rescued banks and their compensation structures, to the captive insurers used by large organisations to avoid paying third party motor claims…. the list is endless and will remain so until we have a system of regulation which is accountable to the customers of the industry rather than the industry participants who pay for its existence.

To those of you who would point up the financial ombudsman service, I would simply direct you to inquire of its paymaster – the FSA.

By: Ian J Wed, 23 Sep 2009 08:08:29 +0000 A good, well natured article, however a couple of criticisms…

Where Steve talks about the effect of inflation on the buying power of level annuity, he should really have included by way of comparison an indexed annuity, as whilst these provide an increasing income they start at a MUCH lower level.

The next step is to calculate the “cross over” period, i.e. the time at which the indexed annuity will finally equal the level annuity in monetary terms, this could be anything from 8 to 15 years depending on the client’s age etc.

The final step is to calculate the “value” period, i.e. the point of time when an equal amount, in monetary terms, will have been paid out by both the level and indexed annuity as it is not until this point that the client has received the same return on their annuity. Again, this can be anything from 17 to 30 years depending upon the client’s age etc.

On this basis, many clients will find that an indexed annuity is not the utopia indicated above!

Undoubtedly, clients need advice regarding the oprions available to them, which include phased retirement and income drawdown as well as “third way annuities” and the adviser needs to take into account health status etc. and more should be done to ensure that this is the default option at retirement…

By: John Scott Wed, 23 Sep 2009 07:42:33 +0000 A fascinating article. Every ten years there is a financial scandal from current account charges to pensions mis-selling, and endownments failures. At least if you are hit by one when younger in life you have some years left to correct the mistake, but not when you are retired and locked into an annuity as in this case.

Beyond annuities completely I am going down the self invested pension route and will have no intention of buying an annuity at the end of my working life!

By: David Edwards Wed, 23 Sep 2009 06:53:15 +0000 I agree the whole pensions racket is ‘a disgrace bordering on criminality’.

Why can we not have ALL of OUR money, when we reach a certain age or retire, to do what we like with?

I am not familiar with MPs pension arrangements but I suspect that they understand the real world very well and have the best defined benefits scheme that OUR money can buy for them – so why would they care about the rest of us?

So, I would like to know what to do – so that, by the time I retire, I can spend MY money as I choose and not how a bunch of spivs and con-men dictate.

By: Peter Tue, 22 Sep 2009 17:41:12 +0000 Its already a disgrace bordering on criminality. I can understand the useless FSA doing nothing as it’s really an arm if the financial industry and staffed by ex financial advisers. And I can understand Labour ignoring private annuitants as they have no interest beyond their own public sector tribe. But the Conservatives have been suicidal, and lost my vote, by their cavalier disregard for protecting their natural voters at annuity time. You save for a lifetime, then when maturity comes you have to chose whether to go open market without first receiving a firm contractual quote from your savings company. Likewise your open market annuity provider does not give you a firm quote, and reserves the right to alter the annuity rate after you accept it. And this happens frequently – it did to me several times. This practice has given rise to a whole industry that buys up dead life offices as they can milk a bit more during the maturity process the more unethical they behave. Tories have taken leave of their senses to connive at this abolition of the law of contract at annuity time. Open Market does not work as you have to buy a pig in a poke – no proper offer and acceptance or even turn round times specified by the FSA. Eevn having rules was recently turned down by the FSA. I am disgusted with the lot of them. I don’t think any parties understand the real world at all.

By: Eric Harrison Tue, 22 Sep 2009 16:27:56 +0000 Excellent piece from Steve Hunt to highlight the ‘rip-off’ Britain saga dealt by the financial industry !!

By: A L miller Tue, 22 Sep 2009 15:39:03 +0000 100% agreement – he could have got a LOT more for his bad health!

Within each council area (for example) there should be a panel of registered IFAs to which such cases should devolve automatically (round robin?) for a fixed fee.

The insurance co should have NO say in the matter.

By: Nigel Saunders Tue, 22 Sep 2009 14:43:58 +0000 The FSA is pushing hard for advisers to adopt Treating Customers Fairly principles (many of us have been doing this for years) – this does not seem to apply to Life Assurance companies never has, probably never will.

cave canem
Beware of the dog