In response to the Treasury's latest consultation on annuity reform, the Scottish life and pension p...
In response to the Treasury's latest consultation on annuity reform, the Scottish life and pension provider says three main changes could be implemented which would change purchase of retirement income from a single event to three or more, to provide consumers with greater options.
Steve Bee, head of strategy at Scottish Life, says the compulsory requirement to purchase an annuity by age 75 should be relaxed, so investors only have to buy an annuity worth at least the Minimum Income Guarantee when at their initial retirement date, with the option to purchase other annuities at a later date.
The third change would allow investors to split the tax-free lump sum and purchase of an annuity, suggests Bee, as this would prevent people from buying annuities at inopportune times, just because they want to get their hands on the tax-free cash.
"Buying an annuity should not be a single event, as it is now. It should be three separate and distinct actions" says Bee.
"These changes would address many of the negative perceptions about annuities and would encourage more people to save for pensions in the first place."
"If people are prudent and sensible enough to save money for their futures, we should not insult them by assuming that they will be stupid in retirement," he adds.
More than half of people over the age of 55 see financial security as a top priority in retirement, yet a third allocate more time to buying a new car, research from Legal & General (L&G) has found.
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