According to Abbey National, if the Inland Revenue does not change its proposals for flexible pensions (known as pension fund withdrawal or drawdown contracts) it will set up an offshore operation to offer 'open' annuities. Where a person is taking income from a flexible pension, an open annuity will allow the dependents of that person to inherit the rest of the pension fund on death. This is what many providers have been campaigning for and some have designed 'money-back' annuities which do the same sort of thing from normal personal or stakeholder pensions.
The new Inland Revenue proposals regarding simplification of pensions actually make flexible pensions less attractive than they currently are.
Our View
If the Inland Revenue does not re-think the changes to flexible pensions we could see many providers using their offshore operations to offer open annuities. We can see that the use of open annuities could be of benefit to those with both large and small pension funds, if they die when using flexible pensions. Anything that offers better value for money cannot be bad. Search the archive for pension fund withdrawal or drawdown. Learn more about at retirement options in the Pensions Adviser.com .