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Govt plans annuities taskforce on retirement income reform

The Government is planning to set up a taskforce examining retirement income focusing on issues around annuities and decumulation, Money Marketing understands.

A senior source at the Department for Work and Pensions says a review is needed as changing lifestyles require different retirement solutions.

The DWP has already looked into annuity shopping around and the open market option but this taskforce will undertake a more detailed examination of retirement income options.

A senior source says: “We need an annuities taskforce and we need to take a proper look at decumulation as it is an area we have not got around to yet.”

The FCA is already conducting a thematic review of annuities with the paper due to published soon. The regulator could conduct a market review of the sector depending on the outcome.

Aviva head of pensions policy John Lawson says: “The Government is concerned people will not have enough income in retirement for their assets so it would be a welcome review of how to take your money at retirement. There will be an awful lot of possibilities to examine for retirement options.”

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There are 5 comments at the moment, we would love to hear your opinion too.

  1. If they hadn’t decimated the various distribution models the assets would have been many times greater and we wouldn’t be pondering the imponderable.

    Strangulation by regulation.

  2. Why do they need to waste more money on this.

    If the FCA is carrying out a review why duplicate things?

    It should be quite simple.

    Make it a requirement that advice is taken.

  3. We don’t need the expense and further delays of an annuities taskfoprce or yet another thematic review from the FSA. What everyone needs is a Retirement Income Bond ~ Income DrawDown unshackled by GAD rates, with an insurance element against early fund burn-out and removal of the punitive 55% death tax on unspent funds. It’s simple, obvious and, I believe, wholly viable. Big strong companies such as Prudentrial and L&G should be leading the way towards the introduction of such a product.

  4. Julian, your imagination knows no bounds.

  5. Thanks for the compliment, but I don’t think imagination comes into it ~ a class of reasonably intelligent 10 year olds could work out what needs to be done and design a packaged product the incorporates the necessary features.

    Poor capital to income ratio. Cause ~ GAD rates. Solution ~ remove GAD rates from the equation.

    Higher income could risk fund burning out. Solution ~ install an insurance element aginst this possibility.

    Lifetime annuities are fixed and unchangeable to reflect changing future circumstances. Solution ~ allow the income level to be re-underwritten at 3 yearly intervals.

    It’s so simple that you want to knock these bloody people’s heads together.

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