LONDON, July 20 Britain will on Monday announce
new rules for the pensions industry that will give retirees
greater access to their savings, fleshing out plans announced
earlier this year that shook the share value of British
Finance minister George Osborne stunned Britain's pensions
industry in March when he scrapped a rule forcing people to buy
an annuity, a financial product which converts a retiree's
pension pot into a guaranteed retirement income.
Osborne is keen to give people more freedom to tap into the
savings they set aside during their working life by forcing
innovation in the country's 12 billion pound ($21 billion) per
year annuity market.
On Monday, the government will confirm its intention to go
ahead with such plans, seen as the biggest reform of pensions in
a generation, and will add detail to its proposals following a
consultation with industry, employers and consumer groups.
"The reforms to the tax rules are about encouraging
innovation and ensuring consumers have the widest possible
choice in how they secure their economic future," a finance
ministry source said on Sunday.
In response to the consultation, the government will on
Monday morning set out its intention to give pensioners greater
flexibility over the way their savings are paid out.
This will include outlines for new annuity products which
tailor for early lump-sum withdrawals and regular payments that
vary over the lifetime of the product to meet the demand of
retirement expenses such as care costs.
Annuities will also be allowed to provide a guaranteed
payout, even if the recipient dies, for much longer than the
current 10-year limit, the source said.
When Osborne first announced the shake-up earlier this year,
it hit the share value of firms like Legal and General,
Aviva and Standard Life who run annuities
businesses. Those shares have since recovered slightly, but
remain below their pre-announcement levels.
The price of long-term British government bonds,
which are used by annuity providers to manage risk, also fell.
($1 = 0.5851 British Pounds)
(Reporting by William James; Editing by Sophie Hares)