The Big Question

Each month we ask leading industry figures to answer one big question... What impact do you feel changes to the Age 75 rule will have on the retirement planning industry?

Philip Brown is head of retirement products at Partnership

Removing the age 75 rule has a number of effects on both the industry and the consumer. 

For the industry it will change the dynamics of the consumers using annuities and could potentially have profound impacts on the rates offered.   

For the consumer the current generation of people at retirement is predicted to have a far greater life expectancy than previous generations (this is particularly so among the oldest cohorts where over the next 20 years people aged over 85 are predicted to increase by over 60% and people aged over 75 will increase by around 70% (Laing and Buisson 2009). 

Peter Carter is head of product marketing at MetLife UK

Abolition of the Age 75 rule will simplify the options for retirement planning and will make pension saving more attractive for everyone, even those who choose not to use the new options.

Reforms should focus on encouraging savers to buy a lifetime income with their pension savings. This should be done while taking a responsible attitude to taxation and discourage people from trying to ‘play’ the system. 

Providers will be encouraged to innovate and offer products such as unit-linked guarantees and other new solutions which will help people make the most of their pension savings.

Ray Chinn is head of pensions at LV=

Even once the detail is clear on how any changes will be implemented, it is not clear whether this will drive a significant change in customer behaviour. Statistics tell us that the most common ages for annuity purchase are 60 and 65. The majority of people have made a decision and committed to buying an annuity well before age 75. 

On the more positive side, if the compulsion to buy an annuity is removed then this will remove a perceived barrier to pension saving and have a positive impact. 

Andy Gadd is head of research for Lighthouse Group

Aston Goodey is director of sales and marketing at MGM Advantage 

The good news is that you can now have the flexibility of products such as drawdown within an annuity contract due to innovation in the flexible annuity market, giving customers the best of both worlds and meaning they no longer need to defer annuitisation.

Nigel Hare Scott is managing director of Home & Capital Advisers

Jonathon Howard is head of corporate clients at Courtiers Investment Services

Anything that increases flexibility and cuts down on red tape is bound to have a positive impact on the retirement planning industry and I hope we will see more people opting for USP in the future. The minimum income requirement should create a natural barrier to entry for those who are unlikely to benefit from the product (assuming it is set at an acceptable level), while empowering the remainder to plan for their retirements in the most efficient and desirable way.

Steve Lowe is marketing director at Living Time

John Moret is head of marketing at Suffolk Life

Nigel Orange is technical support manager (pensions) at Canada Life 

Brian Please is business development manager - insurance & payroll at Xafinity Paymaster

Ian Price is divisional director of pensions at St. James’s Place

Jon Sadler is head of retirement at Alico Wealth Management

Tom Stevenson is investment commentator at Fidelity International

Paul Wilcox is chief executive of the WAY Group

This is great joined-up thinking by what appears to be a pragmatic new government. Subsequent announcements indicate that the swingeing effective IHT rate of 82% is going to be scrapped and in place there is likely to be a 55% ‘recovery charge’ without any extra IHT. In these dark days of budget deficits this seems like a good compromise.