Chancellor Alistair Darling should raise the age at which people must buy an annuity or move into an Alternatively Secured Pension (ASP) from 75 to at least 80, says Living Time, a financial services company.
The comments come as figures from the Institute and Faculty of Actuaries show life expectancy is rising faster than expected.
The institute has sent letters to its members warning life expectancy for 65-year-olds since 2000 has not been rising faster than 10 years ago. The figures suggest a man born in 1950 will have an average life expectancy at 65 of almost 90 years.
Kim Lerche-Thomsen, chief executive of Living Time, says: “The Government has reacted to increased longevity by measures to raise the state pension age to 68 by 2050 and the age of taking benefits from 50 to 55."
He says those opting to buy a lifetime annuity at age 60 or 65 are too young to lock in to a single product for the rest of their lives.
He also says raising the annuitisation age could encourage more people to use their open market option.
He says: “A change would send a powerful message to consumers that there is no compulsion to buy a lifetime annuity at the point of retirement. It would also highlight the consequences of making an irreversible decision early in retirement instead of waiting until age 80 when they are likely to have far better visibility over their future income needs.”
To comment on this story contact:
Tel: 020 7034 2679
E-mail: [email protected]
No preferred charging model
To 1,552 families and businesses
HL and Liberty SIPP slowest
Lifetime and annual allowances