The age 75 rule; what’s it all about? Does it effect UK pension annuity rates? Often asked question about pension annuities. After the recent Budget statement in June, there was a lot of noise and hype about the Chancellor having abolished the so-called ‘compulsory annuity purchase by age 75’ rule. Although, strictly speaking, this ‘rule’ already ceases to exist, the reality is that the options for flexibility about how your retirement income can be taken are limited.
The Government has now actually published its consultation paper on removing the ‘age 75 rule’ on pension annuity purchase. This paper seeks to provide retirees with greater flexibility about how income can be taken, while protecting a key pillar of pension saving, that your savings are used to provide you with a retirement income. The paper recognises that for most people buying an annuity will remain the best way to provide their income in retirement. However, the paper also allows greater flexibility about how and when retirement income can be taken, especially where a minimum income level has been achieved. Given that the effects of mortality drag start to have a significant effect on UK annuity rates from 75 onwards, it seems likely that for many the question will remain ‘when to buy an annuity’ not ‘whether to buy an annuity or not‘.
