12th December 2014
Retirement expert, Billy Burrows, director of Retirement Intelligence, gives his own particular view of the pension income reforms.
It seems like the new world of retirement options is looking like a game of ‘Pension Quidditch’.
For those of you who don’t know what Quidditch is, it is a fictional sport in the wizarding world of Harry Potter. It involves players on flying broomsticks, with quaffle, bludgers, and the golden snitch
In Quidditch, a quaffle is the ball that is used to score gaols. In real life this could be the new uncrystallised funds pension lump sum (UFPLS) which could be one of the ways for people to achieve their short term goal of spending on luxuries. Some commentators call this option ‘uffle puffle’ .
A bludger is an iron ball which is bewitched and flies around and try to knock the players off of their brooms. This could be the mass of misleading information and biased comments.
The golden snitch flies around the Quidditch field at high speeds, sometimes pausing and hovering in place, and the team who catches the golden snitch wins the game. In retirement income terms this could be the prize of the right solution.
Just to make things even more complicated there are dementors and ‘he who must not be named’. A dementor is an evil creature and if you get too near to them every good feeling, every happy memory will be sucked out of you. The one who cannot be named is trying to replace good with evil.
Most people simply want to catch the golden snitch, that is get the prize of a happy and secure retirement pension income, but they might have to be content with catching a quaffle which although it earns points, does not win the game. At all times, pensioners must watch out for bludgers and dementors.
The bludgers should be relatively easy to escape from, because misleading information may knock people off course, but there are sufficient sources of proper information, such as the Pension Advisory Service that will put people back on track.
The dementors, in the form of pension scams and unscrupulous sales people may be harder to fend off if they attack first. However the way to fend off a dementor is to have happy thoughts so those who think about a secure retirement should easily be able to fend off the bad guys.
If you are confused so far, let me put it another way. Working out which retirement income option is best for your circumstances should be like trying to catch the golden snitch; i.e. getting the very best outcome. It might be tempting for you to play the game yourself with the help of an expert but to do so you run the risk of falling off your broomstick and there is no guarantee you will even catch a quaffle. Although a quaffle will get some points (immediate cash and income) they will not win the game (long term retirement income).
You must always protect yourself from the bludgers. These can often come out of nowhere and through you off course. The best way to fend off bludgers is to get advice from a respected financial adviser.
Finally don’t forget about the dementors. They may attack you at any time so you must be on your guard at all times.