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Government pledges changes to annuity rules by end of the year

The Treasury has promised to change annuity regulations, including emphasising the open-market option, before the end of the year.

The move comes in response to repeated calls from the industry and Opposition parties for changes to make annuities fairerfor consumers.

Treasury Economic Secretary Melanie Johnson says she will consider making changes on a number of annuity issues that have been raised.

A Treasury source confirms that she will make changes before the endof this year.

Liberal Democrat social security spokesman Steve Webb tabled an amendment to the Finance Bill, urging the Treasury to flag the availability of an open-market option to clients in the letter they receive from their pension provider.

Webb says the letter should say in bold capitals: “You have a choice and it may be that your provider does not provide the best product” before the company mentions its own product details.

In a debate over amendments to the bill, Johnson urged Webb to withdraw his amendment, sayingthe Government is looking at the issue.

In Parliamentary terms, it is customary that when a minister invites an Opposition MP to withdraw an amendment in this way, it is because it is planning to take action.

The minister said the Government is considering a number of issues such as the requirement to purchase an annuity by 75, based on recommendations from the high-profile reports from Dr Oonagh McDonald and the Social Market Foundation.

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