L&G: Annuities will plummet £9bn in 2015
THE ANNUITY market will plunge from £11.9bn per year to just £2.8bn under new rules giving pensioners more financial freedom, Legal and General said yesterday.
The shock prediction comes ahead of the government’s first wave of changes to pensions, which come into effect from today.
The changes include cutting the minimum income requirement to draw down money from £20,000 to £12,000 per year, as well as doubling the amount that can be drawn down in a lump sum to £30,000 without incurring the 55 per cent tax rate.
From 2015 retirees will also be free to spend their pension pot on whatever they want, rather than being forced to spend their savings on an annuity. Annuity payouts have been crushed by rock-bottom interest rates, which put pressure on the chancellor to change the rules.