The ABI has published policy proposals intended to improve peoples options for taking retirement income from their Defined Contribution pensions.
The paper, Time for Change: Seven proposals to improve DC pension benefits in retirement, outlines policy proposals which will remove existing restrictions and enable people to get maximum value from their pension savings. These include proposals to:
Raise the current age requirement for buying an annuity (or an Alternatively Secured Pensions) from age 75 to 80
Encourage the development of value protection annuities and products that provide a lifetime income guarantee
Address the issue of stranded pots by harmonising rules for occupational and contract-based DC pensions
Increase the income allowance for Alternatively Secured Pensions
Introduce proposals to encourage married and partnered couples to consider their joint retirement income 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, says Maggie Craig, acting director general of the ABI. 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 Britains savers. Our proposals would make a real difference and help ensure people retiring from DC schemes get the most from their savings.
The paper draws on input from pensions industry experts, financial advisers, consumer groups and ABI research into consumers wants and needs in retirement. The proposals have been published to prompt discussion on the changes needed to ensure the current rules remain appropriate for todays retirees, and allow providers to develop retirement income products that meet their changing needs.
D.C.