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Secured Loans > Concern that pensioners may find themselves short of money
Millions of people will be able to gain access to their pension funds from the start of the next tax year, on April 6. The minister in charge of the move, Steve Webb, has said that many pensioners might leave themselves without enough money for their old age, but that this is a ‘calculated risk.’
‘Pension freedom day’ as it is becoming known, will allow people over the age of 55 to do whatever they want with their pension, rather than having to buy an annuity.
In an interview with The Observer newspaper, Steve Webb said that he realises it is a risk to allow people the freedom to do what they want with their own money. Full control might be safer but that has led to compulsory annuities and many very dissatisfied pensioners.
The average length of retirement is 25 years but, as figures from the insurance company Zurich show, fifty per cent of people believe that they will need their retirement fund for only 20 years or even less.
However, Steve Webb believes that although many people may choose to spend all of their pension pot ten or even twenty years before they die, this is not necessarily the wrong thing to do. Perhaps they will enjoy spending their pension pot and then live on the state pension and, perhaps, some other savings. That may even be the best outcome, he said.
Mr Webb also downplayed fears that the pension industry will not be ready for pension freedom day on April 6. A number of insurance companies have already said that they are not willing or ready to allow savers full access to their money next month. Some companies, for example, will not be allowing savers to withdraw their funds gradually, so forcing them to take their pot out in one go and pay a huge tax bill or buy an annuity.
Representative 22.93% APRC variable.
For a typical loan of £26,600 over 180 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £484.00. This includes a Product Fee of £2,660.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £87,030.00. Annual Interest Rates range between 11.7% to 46.5% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
