I see that the Tories are promising to stop the rule that requires an annuity to be purchased at age 75 which is attracting some support from a number of quarters. I have to say that I think this is a good idea in that it frees up choice for the individual. We talk to many clients before the age of 75 about annuities or taking an income from the fund through unsecured pension (drawdown). When the risks of Unsecured pension are properly explained by far the greatest number of clients decide that they want secure income and buy an annuity. If this Tory policy comes to pass the danger will be that people do not buy an annuity for the wrong reasons and end up with a variable income with which they are not comfortable. My advice to the Tories would be to lean on the regulators to ensure that anyone giving retirement advice is appropriately qualified and regulated – otherwise this could be a spectacular home goal – remember the pension transfer scandal of the late eighties?
Final thought – could this just be a Revenue raiser in that the Tories will claim back the tax relief given on the premiums?????????????????????????
Annuity Direct Website
I’ve never been keen on the 75 age limit, particularly when applied to self-invested personal pensions and the like. If a pension fund had some property and shares that were capable of providing sufficient income, then being compelled to sell all the assets to buy an annuity strikes me as rather a bad deal as the asset value then essentially disappears.
OK, I can understand some reasoning for it – to prevent funds being used up before death – but I still feel its too prescriptive.
Comment by Tim — February 16, 2010 @ 11:28 pm |