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ABI: time to improve retirement options

ABI: time to improve retirement options

Category: Pensions

Updated: 18/12/2017
First Published: 04/01/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Association of British Insurers (ABI) has published a raft of new proposals intended to improve people's options from their Defined Contribution (DC) pensions.

The association said that its proposals would remove existing restrictions and enable people to get maximum value from their pension savings. They include:

  • Raising the current age for requirement for buying an annuity from 75 to 80
  • Encouraging the development of 'value protection annuities' and products that provide a lifetime income guarantee
  • Addressing the issue of 'stranded pots' by harmonising rules for occupational and contract based DC pensions
  • Increasing the income allowance for Alternatively Secured Pensions
  • Introducing proposal to encourage married and partnered couples to consider their joint retirement needs.

"The UK pensions landscape is undergoing huge change, with the numbers drawing benefits from DC pensions savings in 2010 set to exceed 500,000. Maggie Craig, acting director general of the ABI, said.

"The good news is that these people can expect to live longer. However, this improvement brings new pressures, which means the current rules and regulations are not fit for purpose.

"The savings industry is keen to rise to the challenge and meet the needs of Britain's savers. Our proposals would make a real difference and help ensure people retiring from DC schemes get the most from their savings."

Andrew Harrop, of Age Concern, said the paper is a welcome and useful contribution to the annuities debate.

"We fully support proposals to offer employees with different types of defined contribution pension schemes the same conditions for drawing small pension pots in cash," he added.

"Extending the availability of value protected annuities beyond the age of 75 would also make these products more attractive."

The pensions sector has also come under spotlight from the Association of Consulting Actuaries (ACA), which has voiced its concern at the rate at which defined benefit pension schemes are closing to new entrants.

A report by the association has revealed that almost nine in ten (87 per cent) defined benefit schemes have now closed to new entrants, with 18 per cent of these closed to future accruals.

Worryingly, 91 per cent of schemes were found to be in deficit, while just six per cent of employers said the Government's stated policy of supporting quality workplace pensions was working, down from 38 per cent two years ago.

"These are worrying times for all those looking to retire in the years ahead," said ACA chairman, Keith Barton.

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