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ABI banks on reviews as it struggles with annuity tree

The ABI is believed to be facing an uphill struggle to develop a manageable decision tree for annuities because of the multitude of options currently available.

It is working on a standard model for annuity purchase but is believed to be banking on simplification from the Pickering and Inland Revenue reviews to help streamline the outcome.

The ABI has set up a special working party to look at standardising annuities. The Treasury gave its tacit backing to a standard approach at a meeting with the industry in April.

The ABI is understood to have at least 12 major providers committed to designing the model, which it hopes will result in better-value annuities for the lower end of the market.

But plans could still see consumers faced with a vast array of quotation options at retirement such as single life, joint life, spouse&#39s pensions and index-linking annuities.

The Inland Revenue and the Department for Work and Pensions are understood to be looking at whether annuities can be transferred to a different basis with the same provider after the industry rejected initial proposals to allow transfers to another office.

Standard Life senior technical manager John Lawson says: “It is a fairly complex process to get a decision tree in this regulatory framework because of the different types of pensions and tax-free cash limits available. There is such a wide range that it might be worth waiting for the Revenue and Pickering.”

ABI spokeswoman Emma Grainge says: “It is still too soon to discuss specifics. It has been a lengthy process and we should have more news in a month or so. A lot of work is going on and we are aware of the different reviews going on.”

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