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IMA calls for new ideas on annuities

The Investment Management Association says responsibility for annuities should be taken away from Revenue and Customs and moved to another Government department to produce more coherent pension policies.

Speaking at the FSA’s annual asset management conf-erence in London last week, chief executive Richard Saunders said there needed to be new thinking on annuities as current rules are not fit for modern life.

Saunders suggested that moving responsibility for annuity rules to the Department for Work and Pensions or the Treasury would produce more coherent policy and introduce much-needed fresh ideas.

He said: “We need to revisit the annuity rules. They are not fit for purpose in the 21st Century. The people taking the decisions are HMRC ,which is not right.”

National Association of Pension Funds chief executive Christine Farnish said the Government needed to be far more adventurous in driving forward the decumulation market and the Revenue’s work was not up to scratch.

She told delegates that there is room for them to move into this area if the Government was willing to be more imaginative.

Farnish, in her last week at the NAPF before moving to Barclays as public policy dir ector, said she was worried about auto-enrolment into the NPSS because it would not be the best savings vehicle for many people.

She said much more flexibility was needed to encourage young people to save, highlighting the fact that New Zealand’s Kiwi Saver scheme allows drawdown for first-time buyers.

Farnish said: “I do not know if auto-enrolment into a pension will be the best place for a lot of people to put their money. It might be better if they were auto-enrolled into another savings vehicle.”

DWP director general for strategy and pensions Phil Wynn Owen said allowing people access to funds would damage long-term saving goals.

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