In a move designed to engender a culture of savings, shadow Chancellor George Osborne MP pledged that the Conservatives will “end compulsory annuitisation at age 75″. The move has been broadly welcomed by those inside the pension finance industry. Tom McPhail from pension experts Hargreaves Lansdown argued that there was in his words “no decent justification for forcing investors to buy an annuity.” Although an annuity can mean a secure income for those in retirement, they do not suit every circumstance, particularly people with large pension pots. Kevin LeGrand who works for Buck Consultants described the move as “long overdue.”
Having the opportunity to control your money past the age of seventy five is said to be appealing to those who do not want to convert their pension pot to into a pension annuity. There are a number of alternatives to buying an annuity such as phased drawdown also known as an unsecured pension. These leave retirees with more control over where their money is invested and in what. There is also a higher element of risk involved but for those who are willing and can afford to bear the risk, it is a preferable alternative to an annuity purchase.
