HM Treasury is consulting on significant changes to the pension regime, which should add much more flexibility, says Paul Howard.
Over the past few years annuity rates have been falling for two reasons: interest rates have plummeted; and life expectancy has increased to such an extent that someone retiring now can expect to spend a third of their life in retirement. When the idea of funding retirement through annuities was legislated in Finance Act 1921 the expectation was to spend perhaps a few years in retirement so the provision of annuities was a good bet for insurers.
No doubt the chancellor saw in the electorate’s disquiet over annuity rates an opportunity to propose ‘the most far-reaching reform to the taxation of pensions since the regime was introduced in 1921’ with the...
