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Annuity and sympathy

The Budget will be heavily influenced by the general election expected by many in the next couple of months.

While Chancellor Gordon Brown has said it will not be a give-away Budget, we can anticipate a Budget focused on the needs of the voting public. Moreover, the Chancellor will probably not wish to upset any potential Labour voters.

With these objectives, we can anticipate changes in tax allowances and thresholds which will improve disposable income for many low and moderate earners.

We can also expect the Chancellor to reannounce important improvements for grey voters, such as the £5 a week increase in the basic state pension, the introduction of the state second pension and pension credit.

We will all be interested in what he says about compulsory purchase annuities. While our research suggests pensioners want the certainty that their pensions will not decrease and will continue for the rest of their life, we recognise that some want more flexibility.

If the Chancellor grasps this nettle, I would expect him to announce a review of the options rather than a definite change in the legislation.

However, we can also expect an interim move to increase the maximum age at which an annuity must be taken from 75 to 80.

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