On 15 July 2010 the HM Treasury issued a consultation on “Removing the requirement to annuitise by age 75”. The Consultation closed on 10 September 2010.
Zoe Lynch, partner at Sacker & Partners LLP, said: "The Coalition Government’s policy of removing the requirement to annuitise by age 75 arrived with a big fanfare under the banner of member choice. But the reality is that most members won’t be able to afford to defer buying an annuity until after age 75. Inevitably, the take-up of these options is likely to be limited only to high earners."
Background to consultation
Due in part to increasing longevity and the fact that people are working for longer, the Government intends to remove the effective requirement to purchase an annuity by the age of 75 from April 2011. The Consultation sets out the Government’s proposals for developing a new tax framework for retirement, namely by allowing:
· capped drawdown: a flexible drawdown model enabling individuals to choose how much to draw down annually from their pension pot throughout retirement (subject to a capped limit), or whether to draw any income at all; and
· flexible drawdown: allowing individuals to draw down unlimited amounts from their pension pot, provided they can demonstrate that they have secured sufficient minimum income (the minimum income requirement or MIR) to prevent them from exhausting their savings prematurely and falling back on the state.
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