Insurance marketers are good in selling Annuity by
the slogan, Pension for Life, what is pension for Life, you will continue to
draw your money until you drop dead, and once you drop dead after the guaranteed period of Ten , nothing goes to
your beneficiary and if the contributors draws up to 9years, the remaining one
year pension goes to the beneficiary though on a monthly basis.
The Americans and Europeans are good at keeping
fortune for themselves, and so annuity is good for them as they are only
interested only on themselves, even where there is a family i.e. the nuclear
family system the annuitants may not extend his savings for his immediate
family unlike in African where we have the extended family system. In Africa,
there is communal effort and Africans are good at being their brother’s keeper.
Even
in America and elsewhere people are avoiding annuity, they argued that the
period where they are paid only a particular and same type for all your life
time is no longer tenable as investment is a necessary part of the pension
scheme . According to Moret “Monitoring investments is very important. “A
pension is for life, it’s not a case of 'buy and forget’,” said Mr Moret, who
has earned the nickname “Mr Sipp” for helping to shape the industry since its
launch.” In annuity , your investment is with other investment as such you
don’t have access to your pension investment as it belongs to the actuary
company and not to the individual investors. But in Programmed withdrawal, all
your investments are reflected on your statements, and so there are the
likelihood of extending the period of monthly pension. And according to Richard Evans in an article” How to get by on a £100,000 pension pot” which appeared in the Telegraph ,If you buy an annuity, you can fairly comfortably exceed this figure. The best-buy annuity will currently give you an annual income of £5,760, according to the Annuity Bureau. Add this to the basic state pension of £5,730 a year and the total comes to £11,490. The problem is inflation. While the state pension will rise in line, this particular annuity will not – the income remains fixed for life. An index-linked annuity currently pays £3,395 a year, making a total income of £9,125, or £775 below what is needed. Continuing Richard thought of an alternative and he states “ let's look at what the alternative could do. This other means of taking a regular income from your pension savings is called "income drawdown". Here, rather than handing over your capital to an insurer in return for an income, you keep hold of it, normally within a self-invested personal pension or Sipp, and take an income from the interest or dividends it produces.”
From this brief presentation, it should be noted that if whites who are advocate of nuclear family can start thinking of alternative to annuity, talk less of Africans who are of the extended family advocates.
According Campbell Fleming he noted that "we don't know how many people will turn their backs on annuities but the
evidence from my home country, Australia, where annuity purchase is
voluntary, suggests that only 5pc of pensioners actually buy one. It's a
similar story in the US. Annuities were designed at a time of high inflation
and high interest rates, conditions that no longer apply. Continuing Fleming stated that he has issues on what could replace it and ask "So what could replace them?" but he went to say that
"the reforms present an opportunity for the fund management industry to
innovate and create investment products that meet the needs of this new
generation of retired people. Clearly, it's imperative that we help that
ensure investors understand their options, as more freedom for investors
means more responsibility for fund managers"
An investment that leaves nothing
to your family when you die is not the best investment, Even in Bible Isaac has
to bless Esau and Jacob before his death. He did not just leave them, the Bible
stated, He bless them.
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