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‘Lords’ vote to end annuity obligation is superfluous’

The House of Lords vote to end annuity compulsion in the Pensions Bill is a red herring, says Standard Life pensions technical manager John Lawson.

The Lords, led by LibDem Lord Oakeshott, voted by 198-144 to remove the compulsion to buy annuities by age 75 this week but technical experts claim that this compulsion had already been removed by the Finance Act.

Lawson says the new tax rules in the Finance Act do not force individuals to buy an annuity by 75 or prove they will not be dependent on means’ testing.

Supporters of the amendment – which include the Retirement Income Reform Campaign – say people should not be forced to buy annuities when rates have fallen so drastically in recent years.

The Government is expected to try to force the Bill through Parliament this week.

Lawson says: “The Finance Act clearly states individuals can stay in drawdown beyond 75 and I do not know whether this is mischief-making by the Lords or a misunderstanding.”

RIRC director Oonagh McDonald says: “The outdated compulsory annuity purchase regime is close to being scrapped.”

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