To ask the Secretary of State for Work and Pensions if he will increase the age at which people are required to buy annuities from their pension funds; and if he will make a statement.
I have been asked to reply.
The Government have no current plans to increase the age limit for compulsory annuitisation.
The Government set out their approach to annuities in their December 2006 publication: "The Annuities Market".
The age of earliest possible annuitisation will rise from 50 to 55 in 2010, in line with Government policy to encourage greater participation in the labour market by older workers. The latest available evidence suggests that the upper age limit (age 75) is not currently a significant constraint on retirement planning as only one in 20 people annuitise between ages 70 and 74. The limit therefore reflects current retirement patterns.
Evidence suggests that age 75 strikes a balance between flexibility in securing an income and ensuring that tax incentives are used for their intended purpose of providing a pension income.
The latest evidence from the Government Actuary's Department (GAD) also shows that increasingly during an individual's early 70s—and certainly by around 75—the rates of return required from alternative assets become unrealistically high for any individual in retirement to justify further delaying annuitisation.