If the government removes the requirement to annuitise by the age of 75 it will allow for further innovation in the pension industry, one sector source has claimed.
Andrew Tully, senior pensions policy manager at Standard Life, said that the industry has already been "hugely innovative" in the post-retirement market during the last few years, with developments including impaired life annuities, money-back guarantees and flexible annuities that allow reviews at a given age, or after a given period.
However, he said that a further move by the coalition would allow more scope for improvements.
His comments follow the publication of a report by consultants Towers Watson, which showed that the value of variable annuity sales rose to £445 million in the first half of 2010, an increase of 34 per cent compared to the second half of 2009.
"For those willing and able to take more risk, income drawdown can be a valuable option, as it gives flexibility around income and better death benefits," Mr Tully explained.
A recent report by the National Association of Pension Funds suggested that government plans to restrict pensions tax relief for high earners are "sound in principle" but need some urgent fine-tuning.
Posted by Claire Robin