The Government has launched its eight week consultation into 'Removing the requirement to annuitise by age 75'.
In his Emergency Budget last month, Chancellor George Osborne revealed that the age at which those looking to retire must buy their annuity would be extended from 75 to 77, but this consultation looks at ways to scrap the compulsory purchase age all together.
The review has been met with mixed reactions from industry experts, the majority of which have welcomed the announcements, which may help pension savers to avoid the pitfalls of falling annuity rates and allow more choice and flexibility in retirement.
Commenting on the consultation, Financial Secretary to the Treasury, Mark Hoban MP said: "This Government is committed to fostering a new culture of saving and responsibility in the UK. To encourage people to take greater responsibility for their financial future, including in retirement, we need to give people greater flexibility over how they use the savings they have accumulated."
Welcoming the news, Jonathan Lipkin, head of research at the Investment Management Association (IMA) said: "The proposed changes represent a significant step forward and will help to create a far more flexible and innovative pensions landscape. In a market where wider options are available, annuities will still have an important role to play, but savers will be able to make decisions that are most appropriate to their specific needs and circumstances."
However, the 'Voice of Britain at work' (TUC), has branded the consultation irrelevant, claiming it is only an issue for the richest pensioners and is encouraging inheritance tax avoidance. Commenting, TUC General Secretary Brendan Barber said:
"Too many super-rich take advantage of the huge tax relief on pensions and shovel away more than they need to into their pension pots when they are working.
"Now they want to be able to take it back out of their pension when they have died and instead pass it on to others. It's not much more than a demand to introduce hereditary rights to tax avoidance," she said.
The Government is encouraging interested parties to get involved and give their views on the proposed reforms.
© Fair Investment Company Ltd
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