AMP is calling on the industry not to miss the consultation deadline to
stop changes to contracting out which would see widows under 45 forced to
take an annuity.
Under DSS recommendations, widows under 45 with no dependent children
would be unable to take a tax-free lump sum on the death of their spouse
and would have to buy an annuity.
The consultation paper was issued in May and the deadline for responses is
AMP estimates around 20 per cent of its policyholders would have to take
an annuity. It wants life offices to respond to the consultation paper to
retain the lump sum benefit.
It says the changes would incur considerable costs for life offices as
they will face more admin.
AMP senior pensions adviser Sue Connolly says: “We do not think that
people under 45 would want an annuity at that age and there are tax
implications. An annuity is subject to income tax, where a lump sum is
A Department of Work and Pensions spokesman says: “The recommendations are
aimed at simplification and removing areas of duplication. The consultation
is still open and we are interested in receiving all views.”