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THE
CHOICES REPORTS
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Dr Oonagh McDonald CBE has been highly critical of annuity compulsion for years. She was a fairly high-profile Labour MP (now retired from Government) in the finance area. She
published a report in 1999, 'Income in Retirement - are Annuities the
answer?' and this lead to the establishment of a group of financial and
pensions experts chaired by her. Their report 'Choices' was published
in March 2000.
This proposes removal of annuity compulsion above a minimum retirement income (MRI) of £140 per week (at 1999/2000 levels). This MRI includes the State pension and any Serps. Any other source of guaranteed income for life, such as a company pension, would count towards this. With
no other income guarantee, this would mean purchasing an index-linked
annuity to the value of around £70 per week.
Above the MRI, any pension fund could continue to be invested/drawndown with no age limit and pass on to a spouse or children less a tax charge on death as happens now if you die before the arbitrary age of 75. This was debated in both Houses (also in connection with stakeholder) but the recommendations were not implemented. |
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MORE CHOICE? A
new report by the Institute of Actuaries proposes removal of the compulsion
to purchase an annuity with your entire pension fund via a personal distribution
plan.
"The
Report aims to identify ways in which the current compulsion to take annuities
by age 75 might be amended. It examines the current provision of retirement
income for members of defined contribution pension (DC) plans who are
obliged to purchase such annuities, regardless of personal circumstances.
It also looks at the shortcomings of existing annuities."
The
report is here:
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