The Government has proposed drastic changes to the design of annuities. Currently, annuities are only available as fixed, increasing or investment-linked income.
Under the new proposals, providers would be allowed to offer decreasing payment annuities and there would be greater flexibility such as one-off payments. Providers would also have to consider allowing annuities to be transferable. The Bill also allows the transfer of annuity from one provider to another.
Our view
This is sensible move to allow greater flexibility and choice. However, consumers will have to be made well aware that income will fall in later years.