(James Saft is a Reuters columnist. The opinions expressed are his own)
By James Saft
(Reuters) – British retirement savers will benefit greatly from new pension rules, though inevitably some will squander the opportunity.
Still, better to make one’s own mistakes than have them made for you by a system which, as it was, laid out a banquet for pension providers and produced table scraps for savers.
Under reforms announced on Wednesday, Britain will scrap pension rules which obliged about 75 percent of retirees with defined contribution, or 401k-style, pension plans to buy annuities.
Instead, most savers will have far more freedom to allocate their pensions as they like at the age they become eligible to take them, with the ability to take more money sooner and to invest more or less as they wish.
The problem with the annuity system, which was designed to protect savers from themselves by insuring they had a stable income in retirement, was twofold; low interest rates and the lousy value offered by annuity providers.