Government conclusions on the pension annuity market
The Government is committed to encouraging and supporting people to make
pension savings. Generous tax reliefs are given on pension contributions and investment returns. In exchange, pension savings must ultimately be used to provide a pension in retirement via the purchase of an annuity (or a scheme pension).
The Government believes that annuities meet consumers’ needs in retirement. The Government’s long term strategy on financial capability will, amongst other issues, look at ways to improve consumer’s knowledge of annuities and the various flexibilities available.
Overall, the annuities market in the UK has responded well to increasing demand,
tripling in size since 1991. The market has also introduced more variety of annuity products offering more flexibility and choice to individuals. The Government will continue to monitor annuities policy as the market develops and grows further and will address any barriers to efficiency as necessary to ensure the annuities market works effectively for consumers.
The Government did announce a review of the open market option whereby consumers can shop around to get the best annuity deal for their situation. Working with key stakeholders in and outside Government, the review will improve the open market option to ensure substantially more people take the opportunity to get the best deal for them in their retirement.
