Treasury U-turns on RPI-linked annuities MIR ban
The Treasury has backtracked on plans to prevent savers using RPI-linked annuities without a floor to meet the minimum income requirement for flexible drawdown.
In May, Money Marketing revealed tens of thousands of savers with index-linked annuities offering no protection against deflation would not be able to use these assets to fund the £20,000 MIR under draft regulations.
However, legislation laid before the House of Commons yesterday says annuities linked to the retail prices index will now be considered as “relevant income” for the purposes of meeting the MIR.
The new legislation will come into force on August 11.
Standard Life head of pensions policy John Lawson says: “Under the new legislation annuities are allowed to vary in line with the RPI without having to have a floor for the purposes of meeting the minimum income requirement.
“This is a win for the industry and a win for common sense as well.”
However, under the new rules investment-linked annuities without a guarantee will not count towards the MIR.
A J Bell technical marketing manager Gareth James says: “The inclusion of RPI-linked annuities was expected, and is positive news. It is disappointing that this good news will not extend to all investment-linked annuity holders.
“They will only be able to count the guaranteed element of their annuity, if such a guarantee exists.”