FSA concerns over consumer annuity u-turn

Following the removal of the age 75 rule, low gilt yields and the onset of Solvency II which may further increase the cost of annuities, the regulator expects retirees to increasingly move away from annuity purchase. Alternative products such as income drawdown may not be appropriate. It warns annuity alternatives may pose the following risks for consumers looking to withdraw income: • the capital value of the fund may be eroded; • the investment returns may be less than those shown in the illustrations; • annuity or scheme pension rates may be worse in the future; and • high leve...