A decision on alternatively secured pensions could appear in a technical paper on decumulation, ahead of the pre-Budget Report.
In its summary of responses to the pensions white paper, the government says it will be publishing a technical paper later this year which will set out its policy on “drawing an income from a pension in retirement”.
The government says the technical paper, which the industry expects before the pre-Budget Report, will respond to the Pensions Commission’s recommendations in this area, which included encouraging later annuitisation and consideration of changes to develop a market for drawdown products.
However, it points out the paper will also highlight the latest developments in the market and “will act as a detailed response to recent challenges to this longstanding policy”, which suggests it will address the issue of ASP.
John Lawson, head of pensions policy at Standard Life, says the technical paper was originally meant to look at the wide subject of how pension saving can be turned into income.
However, he points out the Treasury has recently made it clear it intends to make an announcement about ASP at the time of the pre-Budget Report.
He says: “This technical paper had the potential to be a positive document opening up new ways to turn pension pots into income. But it looks increasingly likely that the document will now be used as judge, jury and executioner of ASP."
Rachel Vahey, head of pensions development at Aegon Scottish Equitable, says it is possible the technical paper could be the same document on decumulation options which the Treasury has been working on, and which is also scheduled for release later in the year.
But she says: “I don’t think it directly means ASP or that there will be a judgement on it, as there have been a lot of challenges outside of this product to the issue of being forced to buy an annuity at the age of 75.”
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