Annuity purchase by 75 rule shows 'clear need for retirement income reform'

Annuity purchase by 75 rule shows 'clear need for retirement income reform'

14 September 2010 / by Rachael Stiles

The proposal to scrap a rule which requires annuities to be purchased by the age of 75 is welcomed by the IMA, which sees it as part of a bigger need for reform of retirement income.

In response to the Treasury's consultation on ending the requirement to purchase an annuity by 75, which ended on 10 September, the Investment Management Association's head of research, Jonathan Lipkin, said it supports the Government's commitment to reform the rules and give pensioners more control over their retirement funding.

"While annuities will continue to play an important role in future provision, the pensions landscape is undergoing a radical transformation," he said. "Reform now will allow greater flexibility in retirement income arrangements and lay the foundations for individuals to make the most appropriate decisions for their specific circumstances."

The IMA also suggests the removal of the age 75 as a reference point for other retirement income rules, including the tax treatment of death benefits.

Mr Lipkin added: "As individual responsibility for retirement provision increases, it is crucial that policymakers consider how to ensure savers receive the right information, education and advice.  While automatic enrolment will help people to begin saving, active - potentially irreversible - decisions are made at retirement."

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