(Bloomberg) — The U.K. Treasury will offer more detail on rules that will govern annuity products as part of its drive for more-flexible pensions.
Chancellor of the Exchequer George Osborne said in his March 19 Budget statement that he wanted to change the culture of pensions saving, abolishing rules that require most retirees to buy an annuity.
The announcement wiped 3.6 billion pounds ($6.2 billion) off the value of insurance companies that afternoon. Today the government will publish the results of a consultation on its plans.
Companies will be allowed to offer annuities with levels of payment that vary over time, to permit the withdrawal of lump sums if needed, and even pay money to survivors.
Financial advice will be provided by independent organizations, funded by a levy on pension companies.
“The decision that guidance must be impartial and separate from the industry is a real game-changer and will help equip people to make the right decisions for them,” Ros Altmann, a pensions campaigner, said in an e-mailed statement.
“The challenge is now firmly with the industry to develop the products that people need, rather than simply the products they wish to sell.”
People contributing to “defined benefit” plans, which guarantee a payment on retirement, will be able to switch their savings to “defined contribution” plans, which simply build up a pot of money.