Scrapping the age 75 annuitisation rules could boost the market for scheme pensions by offering wealthy savers a way to sidestep the proposed cap on retirement income, according to Sipp specialist Hornbuckle Mitchell.
Director Mary Stewart says thousands of pensioners in capped drawdown could be tempted to move to a scheme pension to take advantage of tailored drawdown rates and avoid the proposed cap on retirement income.
She says: “Under scheme pensions, the maximum income that can be taken is set by an actuary based on the individual’s own health and wealth rather than Government Actuary’s Department rates which are partly calculated on average life expectancy. This gives the potential to raise income as age increases and health deteriorates. The cap-ped drawdown proposals raise the prospect of a wider spread of clients, in particular, those individuals with substantial funds outside their pensions who want maximum income but who cannot meet the minimum income requirement necessary to move into flexible drawdown.”
But Hargreaves Lansdown pensions analyst Laith Khalaf says that the cost of employing an independent actuary means this will remain an expensive product.
Khalaf says: “I do not see that this will become a mass-market solution.”