The latest age at which you can purchase a pension annuity should be raised from the current maximum of age 75 to age 80, according to documents produced by the Association of British Insurers (ABI). The group say that the limit of 75 years of age hampers annuitants and that a later age limit would allow for “improving consumers options”. Part of their argument is based on the fact that the current limit is based on life expectancy forecasts that were made fifty years ago. The pattern of increased life expectancy should be factored into the calculations made by law makers in the government, it is argued.
To underline their point, the ABI cite the fact that when the current limit was imposed, the average age at which people lived until was 77 years and 79 years respectively for a man and a woman. In 2010 the male average life expectancy is 86 with females living until age 88 on average. Many who now may want to take pension benefits later in life or chose income drawdown/unsecured pension are restrained by the current age limit of 75.
The ABI documents also point to an increase in the income allowance for an alternatively secured pension as well as looking to develop further value protected annuities. Maggie Craig from the ABI said the pension industry needed to adapt to new times and a changing landscape.
Tom McPhail from Hargreaves Lansdown agreed with the point that the rules in place currently needed a shake up.. ’With the minimum age for taking pension benefits set to increase in 2010, there is no excuse for the government not to raise the ‘Age 75′ threshold to 80.‘ Equally, the ABI’s proposals to allow value protection on annuities beyond age 75 and simplify how people cane take their pension benefits would deliver real and immediate consumer benefits.
