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Over-50s reject annuity proposals

Nearly two-thirds of people aged over 50 are disenchanted with the proposals in the Government&#39s annuity consultation, according to research by Saga Financial Planning.

Around 63 per cent believe the proposals, which include promotion of the open-market option, introduction of a limited-period annuity before age 75 and allowing the opportunity to transfer to a different provider, do not go far enough to make annuities more attractive.

In a survey of 1,000 customers, 87 per cent agreed with Saga&#39s proposal that individuals should only have to buy an annuity to match the minimum income guarantee and then be allowed to buy other investments such as equities and bonds. Saga also won 87 per cent support for its proposal that individuals should only be required to buy an annuity once they reach 65 rather than retirement at a lower age.

Saga wants the Government to introduce a less rigid framework which allows individuals to invest their pension funds as they wish once they have provided a minimum level of benefit.

Comparative rate tables on the FSA website will also not be enough to ensure consumers get the best rate available, according to Saga. It wants all pension providers to publish the top rates when writing to customers.

Saga managing director Andrew Goodsell says: “Our research shows it is not just the industry that believes more realistic proposals are needed but those approaching and in retirement do not feel the suggested reforms are adequate to meet their needs either.”

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