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Govt invites ideas for annuity reform

The Government is giving its strongest indication yet that it is ready to reform the annuities regime as it holds meetings with leading industry representatives advocating relaxation of the rules.

Specialist retirement adviser The Annuity Bureau and Dr Oonagh McDonald&#39s Retirement Income Reform Campaign are among a number of industry and other representatives which have been invited to put forward their proposals for annuity reform.

The Annuity Bureau is suggesting 10 key proposals which include scrapping the 10-year maximum guarantee period on annuities and allowing the transfer of investment-linked annuities between providers.

The IFA also proposes raising the state retirement age to 70 years and allowing occupational pensions to be drawn while a person is still employed with the same firm to encourage partial retirement.

In a recent meeting with the Treasury, the Retirement Income Reform Campaign presented Treasury economic secretary Ruth Kelly with a paper addressing what it says have been the Government&#39s main tax concerns preventing annuity reform.

A campaign spokesman says the Government has been concerned that reform would increase income tax relief for the wealthy because they would not be forced to buy an annuity.

The Annuity Bureau managing director Peter Quinton says: “We have spent a great deal of time developing proposals which could be implemented without a completely new regulatory regime having to be developed or any excessive costs to the taxpayer.”

McDonald says: “A fundamental argument is that taxation concerns should not determine how post-retirement income is delivered. We argue strongly that the Government&#39s fears are unfounded.”


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