For those who take an interest in the UK pension annuity market, there is one particular element of government policy which they would have been looking for in the budget of last week. That was whether the government would scrap the age limit of purchasing an annuity which currently stands at 75. With life expectancy rising and rates for annuities being at an historical low, many believe that this age limit should be scrapped so that those who want to maintain a more flexible pension can do so. Writing in the Daily Mail, Kerrie Kelly of the ABI said that …”by agreeing to look again at the current fixed rules on taking out an annuity at the age of 75, the Government could have sent a message to older pension savers that it was prepared to be flexible about how and when they take their retirement income.”
In fact the Conservatives have pledged to scrap the age limit if they come into office. However some have argued that there are good reasons to keep the annuity age limit in place, as an annuity provides retirees with a predictable and stable income. It can also be argued that locking people into an annuity will mean that they are less likely to be reliant on state benefits should their own pension fund become depleted.
