Legal & General, Prudential and Scottish Widows are all refusing to change their systems to allow customers to continue in unsecured pension until age 77, claiming the Government’s Budget move was unrealistic.
In the June Budget, Chancellor George Osborne announced that the maximum age individuals have to annuitise or enter alternatively secured pension was to rise immediately from 75 to 77 as an interim measure until annuity reforms are introduced next April.
Aegon, Standard Life and Scottish Life are allowing the extension but customers reaching 75 with L&G, Pru and Scottish Widows will have to annuitise or transfer to another provider before 75 to remain in USP. None of the three providers offer Asp.
Aviva customers with the Norwich Union income drawdown product will not be able to continue in USP but Sipp customers do have this flexibility as system triggers can be overridden manually.
Axa Elevate PIA and Winterthur customers are unable to take income beyond 75 but can remain in USP, although those in the family Suntrust can receive income.
L&G head of savings technical Colin Batchelor says: “It is absolutely impossible to change our systems, contract terms and products just like that. Plus we need to weigh it up with the fact that this change will probably only affect a small number of people. We are focusing on the changes taking place next April, although that is going to be difficult enough.”
A Scottish Widows spokeswoman says: “We are not making the interim change but will have the changes in place for next April. It takes time to change the systems and we did not get a lot of notice.”
A Prudential spokesman says: “We are waiting for final legislation to be passed before deciding to make any changes to our contracts but will not be implementing the interim changes.”
Syndaxi Chartered Financial Planners managing director Rob Reid says: “These systems are archaic and were badly designed. The FSA needs to get involved as you have to look at it from the customer’s point of view and this is not treating customers fairly.”