The Treasury is to allow people in unsecured pensions who are below the new minimum retirement age to buy an annuity without incurring a tax charge.
When the minimum retirement age was increased from 50 to 55 in April 2010, there were fears that those who had moved into drawdown before the increase in retirement age would be unable to move to a new drawdown provider or buy an annuity without incurring a 55 per cent unauthorised payment charge.
In July, the Government all-owed people in drawdown to change provider without being hit with the charge but did not offer the same flexibility for people wanting to annuitise before 55. The Treasury has clarified that individuals can also annuitise without facing the charge.
Association of Member-dir-ected Pension Schemes chairman Robert Graves says: “We are very glad to see they have listened and are prepared to make the changes that will benefit the small number of people affected. Perhaps this is a sign that the new Government is willing to put the interests of customers first.”