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Government to review annuities for the elderly

George Osborne has announced a number of proposals with regards to future pension arrangements in the private sector and the public sector. One which has caught the eye of many in the UK is the proposal that those aged over 75 should not be forced to buy annuities to secure their income in later life. So what does this mean for those in retirement?

At the moment those in retirement can buy an annuity at any age although they are forced to buy one once they reach 75, using their pension funds. However, there has been a significant drop in income rates afforded to UK annuities and there is growing anger due to the fact that upon the death of the annuity holder all income ceases, very often benefiting the annuity providers. The new move will see pensioners able to draw down money from their pension funds beyond 75 years of age, without buying an annuity, although they must be able to prove they have a secure income for life.

One further important issue covered by George Osborne is the fact that upon death those in retirement will be able to distribute their remaining pension assets to their heirs. This is just the latest in a long line of changes to the UK pension arena, many of which have been long overdue.

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