People who are coming up to retirement have to become much more savvy in their choice of pension products as rates on normal annuities continue to fall in the current economic downturn.
This is due to two main reasons the fact that Interest rates are at historic lows and retired people are living for much longer. These factors are resulting in a large increase of enhanced life annuities which pay increased annuities to those who for example, smoke, are over weight, or have some other medical condition that may impair their life expectancy.
It has been estimated that sales of enhanced annuities will continue to increase by more than 20% on an annual basis and that they currently account for some 17% of the current market share.
It is not at all surprising that those who are nearing retirement are having to maximise the return on their pension investments.
In 1997 the then Chancellor of the Exchequer Gordon Brown did away with the ability of pension finds to reclaim the tax paid on their invest income from stock exchange investments. It has been estimated by independent research that Gordon Brown's notorious "pension stealth tax" has reduced the value of retirement funds by at least £100 billion.
This minboggling fogure is more than twice as much as the combined pension deficits of the country's 350 biggest companies.
The total current and future impact of MWhat is the most important thing to you in your life? Some might say that it is their spouse or their children. Others might say it is their job. Still others would admit that God is most important in their life.
Many things in everyone's lives fall into the category of important. And some of those things carry more weight or importance than others. Certainly it's important to keep your grass mowed, but paying your bills on time would be much more of a priority.
And so, as we go about our daily lives we take care of many things that are important and necessary. We nourish the relationship we have with our special someone. If we have children then we take care of them the best we can. We manage to secure employment so that we can eat, have shelter and take care of our other responsibilities.
And then of course, there is the personal relationship that we have with God.
Some people do not have a relationship with God. They rarely give God any thought and just go about their business. Some feel that God put us here, and now that we're here we should just do the best that we can.
On the other hand, there are those who work very hard at trying to live their life for God. They speak about God in almost every sentence. They are involved in lots of activities. They are very busy doing what they believe is God's will. But what about having a personal and close relationship with God?
You could have someone do work at your house and never have a relationship with them. They could come over for two weeks to do a project, work very hard, do a great job, but still not have any kind of relationship with you, other than getting your work done.
The question then is, does God just want us to be his busy worker bees, or, does He want to have a very close and personal relationship with each of us? I believe that the later is true.
I have been studying and teaching this topic for a number of months now. It has becomes obvious to me that there is nothing in life that could be, or should be, of any greater importance than our personal relationship with God. Why? Because it affects every aspect of our lives.
That being said, it presupposes that we would indeed want God to be involved in every aspect of our lives. But, why not? Or, do we have a number of things that we think that we really don't need any help, advice, or insight that we could get from God? I think not.
So, how does one go about developing and nourishing a relationship with the Almighty? After all, He is the creator of the heavens and the earth, and I am just me. How do I engage in such a relationship?
While there are a number of simple, yet dynamic aspects of this topic, and not adequate room to get into any great detail in this article, consider the basics. Ask yourself how you go about developing and nourishing a relationship with someone else.
The first step would be to begin a conversation. Talk! Speak to God, talk to Him. It is so simple, yet, for so many, sadly they feel unworthy to do so. For many it is due to sin consciousness or condemnation. People feel unworthy to approach God, yet the Bible declares that God has taken care of that for us in the completed work of His Son, Jesus Christ.
While many are waiting on God, He in fact is waiting on us. He is waiting for us to believe in what His Son accomplished for us. He is waiting for us to believe that he has made us accepted because we have believed in his Son. He is waiting for us to come to Him and have a close personal relationship with Him.
So, again, from a practical side, you can begin by taking the time to just talk to Him. About what? About everything. Open up your whole heart; tell Him all that is on your heart and mind. Thank Him for what He has done for you; ask Him for the things that you need. In short, make time to spend time with your heavenly Father.
When two people engage in a relationship, they make time for each other and spend time with each other. But, it doesn't become a big deep relationship overnight. It takes time. But the more time you invest into developing the relationship, the more it will continue to grow.
Isn't it much better to develop of close personal relationship with God instead of just calling out to God for helping a crisis? The greater our relationship with God the more confidence we will have in trusting Him for His help. It really ought to be the most important thing in our lives.
y Terry Arthur, a fellow of the Institute of Actuaries, in a paper that he has written for that professional body. Mr Arthur said: "What happened in 1997 represented an enormous and ongoing raid on the assets of UK company pension schemes. My research shows it would be very hard to justify an impact of less than £100 billion — and even £;150 billion may still be a conservative estimate."
In addition there is the same effect to those with personal pensions in that those funds were also subjected to the same stealth tax. This has a further effect in the pension finds have considerably much less income to re-invest in the stock market so that both income and capital growth was much reduced by Gordon Brown's stealth tax.
The effect of all of this has seen the once generous company pension schemes being scaled back and at the same time personal pension funds have been hit. At the same time Annuity rates have continued to tumble and have been on a long term decline both due to ever increasing life expectancy and falling interest rates.
In addition the policy of quantitative easing has had the effect to push gilt yields to historical low yields which further reduces annuity rates.
As enhanced annuities continue to increase in their popularity there is I believe a knock on effect on the normal annuity market where rates of income offered to those in good health are continuing to fall.
You can even qualify for an enhanced annuity just based on where you live as actuarial statistics show that those living in the country can have a far higher life expectancy than those living in inner cities.
These are some of the key points to consider to see if you might qualify for an enhanced annuity.
Do you have any relevant medical history if so you should make these known to your proposed annuity provider to see if you can qualify for an enhanced annuity.
How healthy is your life style? You should advise your proposed annuity provider if you are over weight, if you smoke ,if you drink and do you have high blood pressure are some of the points to consider.
Those who are retiring and do not qualify for an increased annuity on health grounds are having to face the fact that the average expectation of life is continuing to increase. Naturally you would expect with the ever increasing increases in life expectancy those who are healthy will see annuity rates continue to fall at a ever greater rate.
Therefore it is clearly important for you to check to see if you qualify for an enhanced annuity. What ever you do you must not approach retirement with out considering as to whether you may be able to claim any enhanced benefit as just a small percentage increase could prove to be very valuable over a number of years.
Lastly, as with any major purchase, you must be prepared to shop around and not necessarily accept the quote from your existing pension provider always see what is available in the open market place.
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Michael A. Verdicchio offers a FREE LIFETIME MEMBERSHIP to, "Enriching Your Life Now!" as well as a FREE NEWSLETTER at http://www.ConfidenceAndJoy.com He also offers a FREE series of articles on success at http://www.ReducingStressAtWork.com Michael is a husband, father, minister, author, and broadcaster. He has also been the voice on numerous projects and productions including Mike's Pep Talks!
