New rules set to 'break shackles on annuity design', says Just Retirement

The specialist retirement income provider said relaxing the current stringent annuity rules provides a platform for guaranteed income providers to better meet the needs of some retirees while addressing criticisms made by some commentators.

Stephen Lowe, Just Retirement’s group external affairs and customer insight director, said:

“Most retirees are attracted to the peace of mind that guaranteed lifetime income products such as annuities provide. Some people have wanted the option for their family to get back
the original amount invested if they die early in retirement.

“It has been possible to buy death benefits attached to an annuity that guarantees to continue paying the income to the customer’s beneficiary for a maximum of 10 years. The new rules look set to allow this period to be extended so an annuity will be able to not only guarantee the income for life, but also guarantee that at least the value of the original investment will be returned even if the annuitant dies.”

Stephen Lowe said he felt HM Treasury’s response was a vote of confidence in the future of products such as annuities that deliver a secure, guaranteed retirement income for retirees.

“To increase flexibility HM Treasury intends to rework the rules to allow payments from an annuity to be varied and for lump sums to be paid for purposes such as long term care.

“We still have to wait to see the detailed tax rules that will apply but we are very positive about the changes we have seen so far. All our post-Budget research tells us that the significant majority of retirees are worried about outliving their assets and want to receive a secure income to at least guarantee they will have sufficient money coming in each month to pay their day-to-day living costs.”