I see Edward Garnier's failed Annuity Bill comes in for criticism by Britannic Retirement Solutions. But it would as BRS are simply there to flog annuities.
Where Mr Garnier possibly went wrong was that his bill proposed that retirees would still be under an obligation to buy an annuity so as to secure sufficient guaranteed income as to keep them off state benefits. This currently cannot be provided as annuities only increase by RPI and not as per earnings. In any event, if they were available, the rates would be derisory.
To be compelled to buy any annuity is illogical so long as pensions remain a voluntary form of savings. Furthermore, take someone in income drawdown mode. Over three years of falling stockmarkets, the average drawdown fund has halved in value and could well be worthless by age 75, when annuity purchase becomes compulsory.
The current outdated system of compulsion to buy an annuity can already be circumnavigated by those with enough desire or enough money. It is about time the Government recognised that one of the major reasons stakeholder has been a flop with its target market is that people object to saving into a vehicle where they have little or no say as to how their money is invested at retirement. Unlike a civil servant's final-salary pension scheme, this is their own money, saved voluntarily. I, for one, want my pension funds to pass to my beneficiaries on my death and not to vanish into some insurance company's coffers.
I am familiar with the argument that annuitants subsidise each other, etc, and accept that annuities have a role to play for some clients. This does not alter the fact that I can get a guaranteed circa-10 per cent income from my capital under this Government's asylum seeker housing programme and capital growth on top. Why do I want to use my pension money to buy an annuity paying 5 per cent, with the capital lost on my death?