LET the pensioners free. That was the rallying cry of the recent British budget, which decreed that those who accumulate a pension pot no longer must use the proceeds to buy an annuity on retiring.The change will bring Britain into line with America and Australia, where those retiring have immediate access to their pension pots. But Canada, Singapore and Sweden still impose fairly tight restrictions on what they can do with their money, as do Denmark and the Netherlands, two countries with widely-admired pension schemes.Many people believe annuities, which transform a pot of cash into regular payments until the beneficiary dies, are a bad deal. Certainly, the failure of Britons to shop around for the best rate when they retire (the so-called open-market option) means that some lose out. But the two main reasons why annuity rates have fallen are fundamental; first, people are living longer and second, the general level of interest rates has fallen.Pensioners exercising their new-found freedom need to take account of both factors. In 1960 British males who reached the retirement age of 65 could expect to live a further 12 years; now it is almost 19...
from The Economist: Finance and economics http://ift.tt/1dQRA2N
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