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Effective obligation to purchase an annuity by age 75 to be removed
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Posted by: Billy Burrows,
on 06/22/2010,
in category "Current news and annuity updates"
Views: this article has been read 1374 times
Introduction The Government has just announced that it will end the existing rules that create an effective obligation to purchase an annuity by age 75 from April 2011. A consultation on the detail of this change will be launched shortly. Legislation for transitional arrangements will be in the Finance Bill after the Budget for those yet to secure an income who will reach 75 in the meantime.
We understand that these transitional arrangements will increase the age by which investors must buy an annuity from age 75 to 77. This will allow those approaching age 75 to defer their decision on what to do with their pension funds until after the new rules are finalised next year.
In practice this means that investors reaching age 75 from now onwards will not be subject to ASP (Alternative Secured Pension) rules that restrict income and levy 82% tax charge to funds paid to anyone who is not a financial dependant and under the age of 75.
Under the new transitional rules, investors will continue with drawdown rules until age 77 which means that on death, a lump sum can be paid out less 35% tax. It will be interesting to see if the ASP rules will continue to apply for those already aged over 75 on 22 June 2010 and who have not bought an annuity.
Also read
Annuities and a question of age - BBC website
Balanced Retirement - The case for annuities and Drawdown
Dan Hyde writes for This is Money
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