Pension Commentator, and Scottish Equitable Pensions Development Director, Stewart Ritchie, has confirmed at a recent pensions seminar that the requirement for you to buy an annuity by the age of 75 looks set to be removed.
Our view
You may not be aware that when you reach retirement, the pension fund that you have built up over the years, is generally invested with either the existing company or with an alternative company (an open market option) to give you an income for the rest of your life. This is your annuity.
The problem over the few years is that annuity interest rates (following the trend of normal interest and gilt rates) is exceptionally low meaning that you lock into a poor annuity rate for life.
You can however delay this decision until age 75 when you have to purchase you annuity. But what about when you reach 75 and rates are low such as now? This is why, in the current pensions simplification debate, the Government are considering removing the 75 rule.
We hope the rule change comes soon!