The Financial Times reports that the Treasury is planning to raise the annuity age limit to 80 from the current 75.
The decision follows extensive lobbying by trade groups and MPs who see the move as providing greater flexibility to pensioners looking to invest.
As the law currently stands, individuals must either buy an annuity or take drawdown by the time they reach 75.
Tory MP David Davis, head of the cross-party Commons public accounts committee, says: “Extending the deferral of annunity purchase to age 80 is a good idea. The trouble is that the government is waiting until half the people are dead before they do anything.”