The 2015 Budget saw the most radical changes to pensions for a generation, ending the requirement of retirees to purchase an annuity - an insurance product that pays out an income to retirees for the rest of their life.
This positive move provides freedom and choice for people with their own retirement finances. Those who retired after 2015 can purchase an annuity, invest in a drawdown account, or cash out their entire pension pot if they wish. True freedom.
For 5 million retired people who were forced to buy an annuity before 2015 under the old rules, there is no such freedom or choice available. They are caught in the ‘annuity trap.
Annuities are often low paying and restrict the ability of retirees to access their pension pot for emergencies, e.g. for vital housing repairs, social care costs or helping to put grandchildren through university.
We are campaigning to urge the Government to revise the rules that unfairly trap five million retirees in the UK. The campaign is calling for all retirees, no matter when they retired, to have the same pension freedoms.
In 2016, the Government agreed to extend the freedoms to this cohort, only to then cancel the plans. It recently said it has “no plans to review this decision”. Let’s end the annuity trap.