Pensions - Articles - Reaction to OECD pension report recommending annuities

 Steven Cameron, pensions Director at Aegon says: “In the world of pension freedoms, the risk of outliving pension savings is a very real threat to the UK’s future retirees. We know that people value security, but this needn’t involve locking money away in an annuity at a time when the rates are offering such poor returns.

 “In response to a clear demand from customers for both flexibility and security, there are now flexible ‘drawdown’ products available which offer the option to select a guaranteed minimum income for life. These products provide the flexibility which have made the freedoms so popular while giving individuals comfort that however long they live, they won’t run out of money, and in doing so address the OECD’s concerns. We fully agree with the OECD that individuals should seek professional advice to ensure they have enough guaranteed income to cover their essentials however long their retirement lasts.”

 Peter Bradshaw, National Accounts Director, Selectapension, comments: “Drawdown has overtaken annuities as the new status quo in the world of pension flexibility. While it is encouraging to see people exercising their freedom of choice and exposing themselves to potential market upside, it is vital that any plans protect against a pension pot diminishing too quickly. Annuities used to give this security, and while they will give a life-long income, rates are still rock-bottom. As such, the role of Advisers here is even more crucial, and they can help recommend flexible income options that can better satisfy the need for cash, and add an element of security.”