The Association of British Insurers’ proposal to increase the age of forced annuitisation to 80 has been warmly received by the industry.
The ABI policy paper, entitled, Time For Change: Seven Proposals to Improve DC Pension Benefits, published this week, called for a number of changes to the way that DC pension income is taken in retirement.
ABI acting director general Maggie Craig says the increasing numbers of people saving in DC schemes combined with increasing life expectancy means the rules governing income withdrawal from DC schemes are “no longer fit for purpose”.
In addition to increasing the age for annuitisation or conversion to Asp from 75 to 80, the ABI is calling for additional protection for pension benefits for pensioners who die after age 75, an exemption from the requirement to annuitise for retirement products that have a lifetime income guarantee and a reduction in the tax rate for lump-sum death benefits for annuities, unsecured pension or Asp.
The ABI also wants to see rise in the maximum withdrawal rate for Asp, a standardisation of the trivial commutation rules for occupational schemes and contract-based DC schemes and the ability for people with small pension pots to combine their funds with spouses or partners to buy joint-life annuities.
MGM Advantage chief executive Chris Evans says any measures that give more control or flexibility to savers is welcome but that any new rules should concentrate on making the open market option work.