Tories will scrap the current pension annuity age limit, the age by which pension annuity rates must be taken. In a move aimed at the culture of savings, shadow Chancellor George Osborne has pledged that the Tories will end the requirement to buy an annuity at age 75. This move has been broadly welcomed by the pensions industry. Tom McPhail, from Hargreaves Lansdown, argued that there was really no decent justification for forcing pension investors to buy an annuity. I have to agree with that sentiment.
An annuity, hopfully on the best annuity rates, can mean a secure income for people in retirement, they do not suit every person’s circumstances, particularly those with large pension funds. Kevin LeGrand, of Buck Consultants, described the move on the annuity age as long overdue. Having the opportunity to control your money past 75 is said to be appealing to those who do not want to convert their hard earned pension fund into an annuity. There are a number of alternatives to doing this, such as phased drawdown (or unsecured pension). These leave retirees with much more control over where their money is actually invested and in what. There is also a higher degree of risk involved but for those who are willing to do this and can afford to bear the risk, it is probably a preferable alternative to a pension annuity purchase.
