Nigel Barlow, Head of Retirement Income Solutions at Just Retirement said: "We understand consumer concerns about retirement income in this unstable climate. We also agree that there is a case for a review. But this should only be done after careful and considered consultation - not as a reflex reaction to circumstances against which annuities continue to offer a safer solution for people with smaller pension funds".
"This is a much more complicated issue than many people appreciate: there is a widespread misunderstanding that people are compelled to purchase an annuity at or before the age of 75. Contrary to popular belief, there are no longer rules in place which require the purchase of an annuity at any age. Income drawdown was introduced 13 years ago to provide an option for people looking to avoid purchasing an annuity when markets are uncertain and values are low".
"In reality, the vast majority of people have purchased an annuity before the age of 75 in the UK; only a very small proportion have not already done so - and they are invariably the wealthiest people with the largest funds. In general, the option to remain invested beyond age 65 is only appropriate for those with larger funds. Deferring annuity purchase and waiting for the market to recover exposes people to continued investment risk which may require them to forgo income payments if their fund suffers a dramatic fall - which potentially may never be recovered."
"Just Retirement believes that the best way to ensure that people make the most of their retirement savings is to increase the information on annuity options to those looking to buy or defer their annuities at the present time. Consumers currently have several choices in terms of how or when they purchase an annuity even in an economic downturn - so they just need to be advised appropriately."
