EDITOR'S BLOG: The annuity providers had it coming to them

MT's editor won't be buying a Lamborghini any time soon, but isn't best pleased with the state of his pension pot.

by Matthew Gwyther
Last Updated: 28 Mar 2014

I’m the kind of idiot who is most unlikely to blow my newly liberated pension pot on a Lamborghini the day after I retire. To tell what a dim patsy I’ve been in keeping the UK pensions industry going up until now – all those admin clerks from Basildon and Bracknell in a job - all you need to know is that I started putting a few quid a year into an Equitable Life policy from my mid twenties. Great move that was.   

The providers of annuities really had it coming to them in the Budget, although nobody saw Osborne’s super-radical rabbit being pulled out of the hat. The likes of Aviva and L&G, who saw their share prices plummet the day after the Budget, have used annuities as a cash cow to soak fees from a trapped customer base who had no choice but to buy their poorly performing products.  

Our chief sub who retired a couple of years back after a worthy career and carefully saving into his pot was completely gob-smacked when he was told what his compulsory annuity was going to pay him. He came back to work part time. When I look at my pension pot and the pathetic rate at which it has grown in recent years while the stock market has been going gang-busters I wonder what on earth is going on. I’d have been better off putting the money on a horse or listening to the deeply unattractive Ray Winstone and going for broke on the in-play.

There has long been a feeling that when it comes to investments and financial products those in the City keep the best, most lucrative stuff for themselves. Every customer is a potential dupe. The industry has always hidden behind the implication that it knows better and it is far more prudent when it comes to financial planning than the average Joe on the street. But look how many average Joes have got into buy-to-let over recent years. They’ve hardly been proved wrong so far. Meanwhile the industry fiddled Libor, conned us with PPI, buggered over SMEs with interest rate swaps and, of course, bled the taxpayer dry with bail-out payments.

Doubtless there will be a few wastrels who hit 66 and then blow their whole nest egg on kilos of Charles, a fast car and gallons of claret. Then, by seventy, they will be skint and thrown to the mercy of the state pension. That will serve them right. They will have an average of 16 more years to consider the errors of their ways as they receive their state pension which, we ought to remind you, is currently £110.15 per week. Then back will go the Lambo to be replaced by a second hand Kia Picanto and a litre of cheap cider on a Friday night.

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