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ABI calls for simpler annuity reforms

The ABI claim current annuity reform proposals are beneficial to only a small number of people and it says simpler reforms are needed.

In a paper entitled, Reforming Annuities: Big Bang or Softly, Softly?, the ABI considers the current and future role of annuities in providing retirement income.

It has looked at whether current alternatives put forward will keep pensioners off means-tested benefits and provide flexibility for everyone.

It found that the proposed reforms, such as the abolition of the age 75 compulsory annuity purchase rule, are likely to benefit only a small number of people at retirement.

The ABI suggests that simpler reforms of annuities alongside reforms to other aspects of the pension system would be more productive.

It believes that MP David Curry&#39s Pensions Annuities Bill will not work, saying that an annuity which provides a weekly income of £140 is not enough to keep people off state benefits.

Senior economist and author of the paper Chris Curry says: “The key benefit of an annuity – providing the certainty of income for the rest of your lifetime – should not be underestimated.

“It is important that any reforms to the current regime benefit as many people as possible. As current proposals only benefit a small number, a more wide-ranging package of simpler reforms may be the way forward.”

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