Money for old rope?

Article Abstract:

United Kingdom money purchase pension schemes provide annuities which depend on rates prevailing when the annuity is purchased. Rates are low in 1997. Money purchase pension schemes are becoming more popular, and there is a move away from final salary schemes where the pension level is guaranteed and is a proportion of the salary prior to retirement. Money purchase schemes have the advantage of greater portability and may suit employees who change jobs frequently. Annuity rates could rise which would help those with money purchase schemes.

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Ruinous, iniquitous and a fundamentally bad idea

Article Abstract:

United Kingdom annuities have to be purchased by investors in money-purchase pension schemes. The schemes are granted tax relief in order to encourage saving, and the government plans stakeholder schemes to increase the number of households with savings in addition to the state retirement scheme. Annuities are affected by inflation, and it is expensive to buy indexed annuities. There is no need to force people to buy annuities since they could simply be compelled to retain capital on which they could live.

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