In an open letter to Work and Pensions Secretary James Purnell, Conservative shadow secretary Chris Grayling has called for a temporary end to the rules requiring people to fix their pension arrangements by the age of 75.
The Conservatives say that at a time when the markets are low, those who are at the point where they have to purchase an annuity with their pension fund could end up significantly worse off in their retirement than they would otherwise.
Grayling offered to help the Government to work through the process of changing annuity rules.
He says: “It makes no sense to penalise someone whose birthday happens to fall within the current period of extreme turbulence.
“We want to see an immediate change to the rules so that people don’t have to make long term commitments before the things have begun to settle down.”
In his letter to Purnell Grayling writes: “Given the current economic climate and in particular the difficulties in the financial markets, we think it is important that people have the freedom to choose to delay purchasing their annuity.
“I am therefore suggesting that, for a temporary period, we work together to change the rules on annuities so that people have the right to defer that decision.
“In times of financial uncertainty people should not be forced to make once in a lifetime decisions.”
Hargreaves Lansdown head of pensions research Tom McPhail slammed the Conservatives’ proposal.
He says: “This annuity initiative smacks of political opportunism – it would do nothing to help investors.”
Hornbuckle Mitchell has backed Grayling’s suggestion, but called for forced annuitisation to be permanently abolished.
Marketing director Mary Stewart says: “The market turbulence is depressing the value of people’s pension funds and making them uncertain about the future. This is a time to encourage people to keep their options open.
“But the broader principle is that turbulence is not limited to financial markets – people go through their own personal turbulence during retirement in terms of their health and changing income requirements.
“We believe suspending the age 75 rule should then be made permanent, allowing people the freedom to focus on making the right decisions at the right time to suit their own personal circumstances without Government interference via an arbitrary age limit.”