The Treasury has stressed its allegiance to forced annuitisation and says alternatively secured pensions should never become a mainstream product.
In a letter to IFA Hargreaves Lansdown, the Treasury says: “The Government did not introduce Asps to provide a means by which a small and wealthy minority could avoid annuitisation and use pension funds to pass on at death. This fund will have benefited substantially from tax advantages to the cost of taxpayers overall.
“Asp is not a mainstream retirement income product and it must not become one. The Government is considering all options for ensuring Asp is used for its intended purpose only.”
The Treasury says in its letter that the requirement to buy an annuity at 75 is justified.
But Hargreaves Lansdown head of pensions research Tom McPhail describes the letter as “mutton-headed platitudinous claptrap” and says Asps generate additional tax revenue.
He says: “Removing the option now will send out the deeply negative message that you cannot trust the Government not to monkey around with the pension system whenever it feels like it, irrespective of the consequences.”