Call for joint life Annuities to be default option

Posted on February 1st, 2012 | Categories - News

An Annuity provider has called for joint life Annuities to be the default option for married couples.

The Annuity provider Partnership, are lobbying Government ministers to change the current situation where in the absence of any other decision a single life Annuity is provided, despite the fact that there may be a dependent spouse.

Spouse’s pension

Financial experts are concerned that dependent spouse’s could be left financially exposed because no decision was made to arrange a joint life Annuity.

The  cost of adding a spouse’s pension to an Annuity is not as high as many people think. Figures produced by Investment Sense show that the cost of including a 50% or two thirds spouse’s pension is generally around 10%.

You can work out the cost for your own specific circumstances by using an online pension Annuity calculator.

“Joint life Annuity more suitable”

Partnership chief executive Steve Groves says: “The Treasury should look at default retirement products. If you are married, a joint-life annuity is more likely to be suitable, so that is something that needs to be looked at.”

Speaking at a conference last week the pension’s minister, Steve Webb, said that the idea was being actively discussed.

Concerns over small pension funds

The proposals by Partnership could be included in a leading think tank’s recommendations.

The International Longevity Centre (ILC) are due to set out policy options next week amid concerns that those people with smaller pension funds will be disadvantaged by the Retail Distribution Review (RDR) when it comes into force in 2013.

Baroness Sally Greengross, chief executive of the ILC said: “At the ILC, we are concerned that the retail distribution review could lead to a reduction in the availability of advice. We need to ensure that people with small pension pots do not lose access to advice altogether.”