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L&G urges Pada to set up default annuity

Legal & General is calling for the Personal Accounts Delivery Authority to offer a default annuity for investors or risk having hundreds of millions of pounds of unclaimed benefits build up.

Pada is consulting on proposals, which include setting up a panel of providers for investors approaching retirement to choose an annuity. Investors would have to decide, among other things, whether they want a level or increasing benefit and provide for their spouse.

But L&G wealth policy director Adrian Boulding says many in Pada’s target market will be daunted by the choice due to lack of knowledge or will simply not engage with the process.

Boulding says the default option should be level with either a spousal benefit or a five-year guarantee and be provided by the firm on the panel offering the best rate at the time.

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