Reuters - Video

EDITION: U.S. | U.K. | IN

Finance Videos

Where will UK pensions money go?

Thursday, Mar 20, 2014 - 02:36

Mar. 20 - The latest UK budget ushers in pension reforms which will potentially free up billions of pounds for investment. Joanna Partridge looks at what impact it will have on the pensions industry - and where the cash might go.

▲ Hide Transcript

View Transcript

He called it a budget for makers, doers and savers. The big surprise in British Finance Minister George Osborne's annual budget plan was a shake-up of pensions - a move that's being seen as a vote winner among older Brits. He called it the biggest change in 30 years. It gives Brits more access to their pension pots. People won't have to buy annuities - insurance products bought on retiring, which pay out monthly sums until death. Pensioners will also be allowed to take more money from their pension pots as a lump sum. Richard Jeffrey from Cazenove Capital Management says the change is not before time. SOUNDBITE: Richard Jeffrey, Chief Investment Officer, Cazenove Capital Management, saying (English): "This does not mean that people are not going to buy annuities full stop. Annuities will still I think suit a lot of individuals when they come to retirement age." Despite this, Osborne's announcement wiped billions of pounds off the market value of the pension industry. If some annuity demand falls away, insurance firms could now face lower levels of business in a market worth 12 billion pounds a year. Shares dived by as much as 8% at Legal & General on Wednesday. According to Bank of American Merrill Lynch, it makes a quarter of its core profits from annuities. Stock in other insurers Aviva and Prudential also slid. Britain's big insurers insisted their businesses are diverse enough to withstand any long term hit to annuity sales. So what could investors do with their extra funds? SOUNDBITE: Richard Jeffrey, Chief Investment Officer, Cazenove Capital Management, saying (English): "I think it will mean that more is held in equities and for a longer period. I think there may be you know another interesting outcome from here. I think it may make people more aware of what they have in their investment portfolios. I think because of this situation in which most people when they built up a pension fund, it's just been effectively transferred into an annuity and an annuity income, didn't really think about what they had in their pension fund and weren't particularly close to the assets which are held there. I think this will make people closer to the assets and make them more responsive to how things develop, particularly in equity markets, so you might actually see the cult of the investor emerging in the UK in the same way as you see it in the U.S." Others expect some pensioners to put their cash into property - which may affect the buy-to-let market. The government has asked insurers and other pension providers to give retirees guidance. But there are fears that while some pensioners may become canny investors, others may invest badly and risk squandering their life savings.

Where will UK pensions money go?

Thursday, Mar 20, 2014 - 02:36

Top News »

Money »

Finding meaning in the S&P 500 2000 mark Finding meaning in the S&P 500 2000 mark

Mon, Aug 25, 2014 - (2:35)

S&P falls back from record high S&P falls back from record high

Fri, Aug 22, 2014 - (1:35)

S&P 500 closes at new high S&P 500 closes at new high

Thu, Aug 21, 2014 - (1:24)

S&P 500 just shy of record S&P 500 just shy of record

Wed, Aug 20, 2014 - (2:23)

Apple hits $100 a share Apple hits $100 a share

Tue, Aug 19, 2014 - (2:06)

Nasdaq closes at 14-year high Nasdaq closes at 14-year high

Mon, Aug 18, 2014 - (2:23)

Putin puts Wall Street in buying mood Putin puts Wall Street in buying mood

Thu, Aug 14, 2014 - (2:10)

We've become a promotional culture-RetailMeNot's Bodge We've become a promotional...

Thu, Aug 14, 2014 - (4:39)

Dow back to positive territory for year Dow back to positive territory for year

Wed, Aug 13, 2014 - (2:18)

The Exchange »

The Exchange: Hot commodity The Exchange: Hot commodity

Wed, Jul 16, 2014 - (9:25)

The Exchange: Constitutional crusade The Exchange: Constitutional crusade

Wed, Jun 25, 2014 - (11:35)

The Exchange: The value of money The Exchange: The value of money

Mon, Jun 02, 2014 - (9:53)

The Exchange: China’s Second Continent The Exchange: China’s Second Continent

Tue, May 27, 2014 - (9:35)

The Exchange: A master of business arts The Exchange: A master of business arts

Thu, May 08, 2014 - (8:24)

The Exchange: America's bankrupt cities The Exchange: America's bankrupt cities

Mon, May 05, 2014 - (8:52)

The Exchange: Let the rocking commence The Exchange: Let the rocking commence

Tue, Apr 08, 2014 - (8:13)

The Exchange: The Moneyball fallacies The Exchange: The Moneyball fallacies

Mon, Mar 24, 2014 - (9:54)

Is doing good a good business? Is doing good a good business?

Mon, Mar 17, 2014 - (7:38)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)

A refugee in America gives back A refugee in America gives back

Wed, Jul 02, 2014 - (3:25)

A long search for refuge A long search for refuge

Fri, Jun 20, 2014 - (3:04)

World Cup: Around the globe in 50 goals World Cup: Around the globe in 50 goals

Fri, Jun 06, 2014 - (1:08)

VIVID – Sydney’s spectacle of light VIVID – Sydney’s spectacle of light

Fri, May 30, 2014 - (1:37)