Resolution Share Discussion Threads

[skinny] 20/3/2014 12:05

Aleman - you can do that under the current income drawdown arrangements -

The change means that you are not tied to the GAD rates dictating your annual withdrawal limit as now.

[aleman] 20/3/2014 11:53

If you are allowed to draw the cash down from a personal pension flexibly, and some are suggesting you can but I've not seen any detail, I can see there being a huge boom in pension mortgages. Take out a mortgage at 35 with an interest only loan. Pay extra into your pension with tax relief. Get to 50, draw out 25% tax free and the rest over a few years up to you tax band limit to keep the tax down. Use the cash to pay off the mortgage. Would be even better for older housebuyers whose tax-band at mortgage maturity might be lower than that claimed back at the start. I'm not sure it will be this flexible but pensions companies could get extra mortgage saving with 1.5% commissions per year on invested funds, if it is. Non-pensions mortgage providers would lose business.

Anybody know how flexible the cash drawdown will be? Can you draw 25% tax-free at 55 and leave the rest invested to be withdrawn in bits?

[skinny] 20/3/2014 11:14

To put things into perspective (I hold all 3).

[skinny] 20/3/2014 11:10

And another..

Canaccord Genuity Hold 312.05 375.00 375.00 Reiterates

[a0148009] 20/3/2014 11:07

Skinny - I would not dream of it!

AO

[al101uk] 20/3/2014 10:59

So Credit Suisse has a 340p target before the budget and now have a 340p target after the budget.

How can the biggest change in annuities in decades have no affect on their valuation on the company!?!

f'king analysts... waste of space!

[volsung] 20/3/2014 10:41

I'm buying more for the time being

[skinny] 20/3/2014 10:36

Surely you are not suggesting city shenanigans!

RBC Capital Markets Outperform 313.70 420.00 400.00 Retains

Credit Suisse Underperform 313.70 340.00 340.00 Reiterates

Barclays Capital Overweight 313.70 378.00 361.00 Reiterates

[a0148009] 20/3/2014 10:22

IOMhere Yes I have been thinking that myself there was persistent selling all day
Tuesday and I could not understand the reason why especially selling with the dividend,you can only relate this after the event.

AO

[iomhere] 20/3/2014 10:10

In a small way, RSL started its decline early on Tuesday so did somebody take advantage of what was coming?
The slight recovery late on yesterday, incidentally, was IMO bear covering.

And a penny off a pint! Is this to help our locals? Supposing it's not passed on (which is the best way since 1p barely covers the administrative cost) then it's hardly going to make a difference to brewer or publican.

[hvs] 20/3/2014 09:38

Nice timing for your EXIT Cowdrey.

[cwa1] 20/3/2014 07:21

I suppose there's an element of "they would say that, wouldn't they?" in this statement BUT they seem as upbeat as they could be under the circumstances. Can they walk the talk?

[skinny] 20/3/2014 07:02

Resolution believes that the impact of the Chancellor's proposals for greater choice in pensions will be far-reaching and the implications will take time to be fully understood.

There is a negative implication for new business flows in the individual annuity market, as some people utilise the increased flexibility provided by the Chancellor's proposals. However, we believe that annuities will continue to be an important product for those who value the guaranteed income throughout increasingly long retirement periods.

Overall we see the proposals as a positive for the retirement savings market. The increased flexibility for savers means the attractiveness of placing additional contributions into a pension has now increased. As the number 2 player in workplace Defined Contribution ('DC') pensions with around 2 million DC pension customers overall (estimated to hold 1 in 7 policies in the market), and with positive operational leverage in our Corporate Benefits business, Friends Life is well placed to benefit from these changes.

As highlighted at our Strategy Update this week, we have 1 in 9 retiring DC pension customers, and we are already working on expanding our transition to retirement propositions, including guidance and a broader range of products and services for our customers as they approach retirement. We remain well positioned for this key, fast growing market segment.

In 2013 our UK Retirement Income business contributed £4 million to our Sustainable Free Surplus ('SFS') of £331 million; the IFRS operating profit contribution was £30 million out of £436 million for the Group. In addition the business contributed £83 million to Value of New Business within Group MCEV operating profit of £489 million. Guaranteed Annuity Options, which in the current low interest rate environment are likely to continue to offer good value for customers, represented about half of our annuity new business volumes in 2013.

We do not expect the changes announced today to have any impact on our Heritage business or our Group MCEV of £6,065 million (as at 31 December 2013). Furthermore, we reiterate our guidance on the estimated £39 million uplift in Expected Return (a key component of our SFS generation) for the combined UK and Heritage divisions in 2014.

- Ends -

[asmagliocco] 19/3/2014 21:43

Thanks for that link sr8.

[srichardson8] 19/3/2014 18:09

This is a link to some comments from Standard life on what the changes mean for pension holders but as usual ask your financial adviser when you think he might know!

[fenners66] 19/3/2014 16:52

But of course EJ - aren't we all really successful investors on here (?) and therefore already worried about our huge IHT liability !

[aleman] 19/3/2014 16:36

Annuity sales fell 16% last year. Did insurers' shares get slaughtered? No. 67000 annuities at £18k each, paying £1k per year. How much profit will that be? £1.2trn cost paying out £67m per year. £120m profit per year across the whole sector maybe? Maybe less. Must be pretty thin if you spread it out. It probably won't affect some insurers much. £5bn has been wiped off insurance sector values. That seems too much at a quick glance.

Edit - found another source said it's 353,000 at an average of £36k. That would make profit more like £1bn per year. That makes the falls seem more reasonable.

[fenners66] 19/3/2014 16:32

E J - certainly he said we can still have a lump sum of 25% tax free. Any funds drawn to take an income would be at the marginal rate , but after death was not mentioned, I'm just being a bit cynical that the "special circumstances" arising on death may still be covered by the existing rules(?) that would be 55% tax (?).
So chancellor gains...
Even if only taxed at marginal rate , say you had a pot remaining of £100k what is the marginal rate on death?
Thereafter any sizeable fund making its way into ones estate may attract Inheritance Tax as well?

[a0148009] 19/3/2014 16:26

The main concern is irresponsible retirees blowing the lot with unlimited cash withdrawals and becoming a greater burden on the State at some stage. The government is relying on the Triple Lock on State pensions but this will not provide a comfortable living income but will be a growing tax burden on the working population supporting an ever increasing aging population, consequently less money to save for their own pension.The good days of a livable income on pensions have long passed. There has to be some safeguards on the pension pot.

Hence there is still a case for annuities which should be more competitive.

AO

[fenners66] 19/3/2014 16:09

The pension changes will address what was for me always the trouble with pensions - that I could save tax free but not necessarily for my benefit. I guess if I die without taking an annuity then the tax man can possibly still get his hands on 20-55% of the pot?

However I am far more likely to invest in my pensions now so the investment managers should gain whilst the annuity managers lose.

Does this mean less government bonds to be purchased?

Does that mean bond yields will rise?

Does that mean interest rates will rise generally?

Or will the ordinary man in the street just get an annuity anyway?