There are some pension annuities changes; no need to buy a pension annuity from April next year. Is that good news? Potentially for some people. However, these changes won’t impact on most people, who will continue to buy an annuity for their retirement income. The requirement to buy an annuity by age 75 has existed since 1976, when the average life expectancy of a healthy 65-year-old male was around 13 years. On average, a healthy 65-year-old male can now expect to live for around 21 years, and a 65-year-old female around 24 years. These changes shouldn’t effect the annuity market too much, which was worth £11bn in 2009. However, we should see the introduction of new products.
The Association of British Insurers (ABI) was pleased with the government’s ongoing commitment to the existing annuity market. Maggie Craig, director of life and savings, said that for the vast majority of people, buying a pension annuity is still the right choice, as it provides them with a guaranteed income for the rest of their lives. This consultation is an opportunity to put a framework in place that works for all consumers, but it is vital that any new measures protect the principle that pension savings are primarily intended to provide a retirement income, she added. The government has invited opinions from various annuity providers, personal pension providers, insurance industry bodies, consumer organisations and other industry advisers and professional bodies on all of these proposals.
