Scrapping compulsory annuity is a very positive move

Scrapping compulsory annuity is a very positive move

23 June 2010 / by Rachel Mason

Nick Scarrett, Head of Pension and Investment at Fair Investment Company, comments on the Government's decision to abolish rules that force pension savers to buy an annuity at 75, pushing it up to 77 with immediate effect and scrapping it completely from 2011.

"By ending the existing rules that make it obligatory to purchase an annuity by the age of 75, the Government is giving people much more choice and flexibility about how they want to make use of their pension.

"Instead of being forced to buy an annuity at 75 and having to take the rates available at that time, pensioners are being given the choice of when and even if they want to buy an annuity with their pension fund.

"I think it is a very positive move; not only will it mean that people have more choice, but hopefully it should go some way to encouraging people to save into a pension scheme.

"However, the devil is in the detail, and it depends on what comes out of the consultation as to how much it will help pensioners. For example, how will death benefits be taxed for those over the age of 75?"

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