The Reform of Pensions Needs Shifting a Generation
As people today tend to live longer and continue to work longer, it has been said that a tax reform is critical. The removal of the requirement to have to purchase an annuity plan before the age of 75 has been generally welcomed by the financial industry as a step in the right direction and it is thought that this will help to avoid a dependency on annuities.
Along with these changes, tax options for those coming up to retirement age should be improved.
At the moment, residual pension funds are taxed after death and some are calling for a roll over in the funds that are left following the death of the pension holder to the funds of their beneficiaries. This step would then help future generations, who are at risk due to low contribution rates, and would mean a meaningful contribution for the next generation.
Thanks to low pension funds, many approaching retirement age have opted to look into equity release schemes which may help to ensure they have extra money during their retirement. Their other option is to purchase an annuity to top up their income to what is determined to be the minimum requirement. Some say there should be more flexibility over what actually constitutes minimum income.
Many pensioners find themselves short of cash despite having a little more than the minimum income needed. As some feel they are working all their life and then having to scrimp and scrape in their retirement years, releasing any equity in their property could help the retired to enjoy their retirement.