Coalition Government To End Requirement For Annuitisation

by admin on July 18, 2010

The new coalition government confirmed this week that it would be bringing in radical new pension rules that would see an end to retirees having to buy an annuity.

Tom McPhail who one of the most respected commentators in the UK pension industry said the new rules went further than he had anticipated. He said that…”…this is more radical than I expected. It effectively means no one has to buy an annuity, ever. Realistically, people on very small pension pots might not satisfy the minimum income requirement, so will have to buy an annuity anyway – the vast majority of annuities are purchased with relatively small pension funds of £50,000 or less”

Jennie Gray, Independent Financial Adviser from annuitycalculatoruk said “We are still waiting for full details of the proposals, but it looks like the biggest shake up of the UK Pensions system ever.”

Under the old annuity rules you had to purchase an annuity at age 75, which meant many people that did not require the income from their pension fund were forced to purchase an annuity. At the same time if that person died before age 75 and had not purchased an annuity then the whole of their pension fund without a tax charge was returned to their estate. This was a very lucrative tax advantage.

Jennie Gray, commented further: “.. these new rules will make the annuity providers look at the market in a different way and perhaps develop new products.

To find the best annuity rates use the annuity calculator

Comments on this entry are closed.

Previous post:

Next post: