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Pension providers increase annuity cancellation periods

Pension providers have increase cancellation periods for annuity purchases in the wake of the pensions shake-up announced in the Budget.

Osborne set out last week that under sweeping reforms to pension flexibility people will be able to take their entire pension pot as cash from age 55 from April next year.

Scottish Widows and LV= have doubled the annuity cancellation periods to 60 days and are actively contacting customers.

MGM Advantage has extended its cancellation period to 60 days after the policy document is issued.

Aviva will now allow cancellations up to 30 days from when the policy is set up instead of when the application is signed.

Partnership has extended its 30-day cancellation period, with any new business accepted after 3 March given until 11 April as a cooling-off period. Any quotes currently within the guarantee period will be extended to the same date.

Standard Life says anyone who purchased an annuity up to 35 days before Budget day can cancel and they can cancel for a further 30 days post-Budget. It means someone who purchased an annuity on 13 February can cancel it anytime until 18 April.

Under interim reforms, the Government will increase the trivial commutation limit from £18,000 to £30,000 from 27 March.

The flexible drawdown minimum income requirement will be cut from £20,000 to £12,000, while the maximum annual drawdown will increase from 120 per cent of GAD to 150 per cent.

Hargreaves Lansdown head of pensions research Tom McPhail says: “Insurance companies do not want to be accused of exploiting this short-term situation to trap customers in unwanted contracts. For someone just going through the process it is not unreaonsble to pause and reflect.”

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