Steve Webb: Rising retirement age offset by enhanced annuities
22 June 2012
Pensions minister Steve Webb has claimed enhanced annuities could be used by older people in order to offset the rising retirement age in the UK.
Speaking to a National Association of Pension Funds conference, he predicted these products are going to become increasingly popular in the next few years.
The minister was commenting following a report by Saga that claimed the growing trend for people delaying their retirement is going to continue until 2025.
Mr Webb argued in his speech that the advantage of purchase enhanced annuities was the great "undersold merit" of switching to defined contribution (DC) pensions, which he claimed could compensate for spiralling state pension age rises, reports Citywire.
Rising state pension age
"State pension ages will rise and rise and rise - in Denmark for example it is set to rise to 75 by 2085," it was noted by the pensions minister, who added those with impaired life DC are going to get a better deal as a result.
"So we can offset what is a necessary change going on around the world," Mr Webb said, pointing out the government is against the matching adjustment plans being considered by the European Union that have been forecast to have a negative impact on annuity rates.
He said: "We are convinced a proper impact assessment would reveal it to be wholly inappropriate, deeply damaging and answer a question that does not need to be asked."
Saga's report discovered 27 per cent of people over the age of 50 are planning to remain in their roles beyond 65, with men more likely to decide to do this than women.
Chief executive of Saga Services Roger Ramsden explained there are a wide range of reasons why older people would wish to stay in their jobs for longer, from earning more money to enjoy a more comfortable retirement to the satisfaction they get from contributing to the economy.
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