BUDGET: Age 75 rule to be scrapped from next April
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The Government will scrap compulsory annuitisation from April 2011 and will introduce transitional measures for those who have not secured a retirement income and reach age 75 in the meantime.
A consultation on the detail of the proposal will kick-off shortly.
The Budget document states: “The Government will end the existing rules that create an effective obligation to purchase an annuity by age 75 from April 2011 to enable individuals to make more flexible use of their pension savings.
“The Government will shortly launch a consultation on the detail of this change and will introduce transitional measures for those yet to secure a retirement income who will reach 75 in the meantime.”
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Readers' comments (12)
Rob | 22 Jun 2010 2:27 pm
Makes good sense, another good move by our alliance Goverment
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Richard Brown, Managing Director, Moneynotion Limi | 22 Jun 2010 2:40 pm
At last someone is listening!
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Evan Owen | 22 Jun 2010 2:42 pm
At long, long last, some common sense.
However, given the demise of the annuity providers and the risks of them falling over there was little choice.
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Jason | 22 Jun 2010 2:46 pm
This is a good. Giving people the option rather than forcing their hand is a move for the better as far as i'm concerned.
Common sense and the government, who would have thought it??
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Fraser Brydon | 22 Jun 2010 2:49 pm
well done that man....
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Julian Stevens | 22 Jun 2010 3:09 pm
But there is already no compulsion to buy a lifetime annuity at age 75. The problem of course is GAD rates and the punitive tax treatment of unspent funds on death. Remove the shackle of annuity rates and permit unspent funds to pass tax free into PP's for the next generation and these issues would be dealt with at a stroke.
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Anonymous | 22 Jun 2010 3:20 pm
This seems to be a positive move, but at this time you loose your right to claim a tax free cash lump sum at 75 has this also been scrapped?
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Mr Old Fashioned | 22 Jun 2010 3:29 pm
This looks like a great headline, but a word of warning: what if the coalition govenment has stolen a leaf out of Tony BLiar's book and it turns out that it is nothing like as good as it sounds due to the "small print" that is later issued?
This will be one of the areas that I will be looking out for.
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Peter Davies @ Create Wealth Management | 22 Jun 2010 3:35 pm
'Scrapping of Compulsory Annuitisation' - lets wait to see the full details of the new alternative in the months ahead after the consultation is completed. Recent governments have a history of back tracking on similar issues. We need a viable alternative in place ASAP in order to make pensions a more attractive vehicle.
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Peter Mazonas | 22 Jun 2010 6:42 pm
Compulsory annuitisation only makes sense if the annuity payments are pegged to the actual life expectancy of the annuitant, rather than large population-based tables that tend to over estimate life expectancy and under pay seniors. Peer review and published tools exist that are extremely accurate in predicting life expectancy at the individual level. Pricing using these tools would more accurately reflect the cash flow obligation and balance the risk while fairly compensating seniors - and not at the expense of the annuity poroviders or the government.
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