05 January 2010
The ABI published a paper yesterday called "Time for Change:
Seven proposals to improve DC pension benefits in retirement".
As the name suggests this paper outlines proposals to improve the
flexibility of pension schemes and to help people to get maximum
value from their pension savings.
The paper draws on feedback from pension industry experts, IFAs,
consumer groups and ABI research into consumers' wants and needs in
retirement. The proposals have been published to prompt
discussion on the changes to legislation and to allow providers to
develop retirement income products that meet their changing
needs. This includes proposals to:
- Increase the age requirement for buying an annuity (or an
Alternatively Secured Pensions) from age 75 to 80
- Encourage the development of "value protection annuities" and
products that provide a lifetime income guarantee
- Address the issue of "stranded pension pots" by harmonising
rules for occupational and contract-based DC pensions
- Increase the income allowance for Alternatively Secured
Pensions
- Introduce proposals to encourage married and partnered couples
to consider their joint retirement income needs
Maggie Craig, Acting Director General of the ABI,
said:
"The UK pensions landscape is undergoing huge change, with the
numbers drawing benefits from DC pensions savings in 2010 set to
exceed 500,000. The good news is that these people can expect
to live longer. However, this improvement brings new
pressures, which means the current rules and regulations are not
fit for purpose.
"The savings industry is keen to rise to the challenge and meet the
needs of Britain's savers. Our proposals would make a real
difference and help ensure people retiring from DC schemes get the
most from their savings."
Andrew Harrop, Head of Policy at Age Concern and Help the Aged,
said:
"The ABI's paper is a welcome and useful contribution to the debate
on annuities. Some of the proposals echo calls for fairer and
simpler tax legislation outlined in our recent report on the
annuity market.
"We fully support proposals to offer employees with different types
of defined contribution pension schemes the same conditions for
drawing small pension pots in cash. Extending the
availability of 'value-protected' annuities beyond the age of 75
would also make these products more attractive."
The full paper can be viewed on the ABI's webpage here:
www.abi.org.uk/Retirementpolicypaper10
