The chancellor of the exchequer should announce a "radical shake up" of the present annuities system in his Pre-Budget Report (PBR) on December 9th, a charity has said.
Age Concern and Help the Aged said that many people with smaller pension pots were facing unacceptably high tax costs when converting their savings into a retirement income.
A general lack of competition in the annuities industry was also highlighted by the charity, with the ten largest providers thought to control around 90 per cent of the total market.
Equity release plans remain an alternative source of retirement income for those disappointed by their pensions.
Andrew Harrop, head of public policy at Age Concern and Help the Aged, said: "Despite the impact of the recession, the right annuity continues to offer a secure way of turning retirement savings into a stable source of income."
He added: "But the tax system penalises those with small pension pots and the annuities market is hamstrung by legislative complexity and dominated by a few major players. This adds up to a poor deal for people with small pension pots."
Posted by Tom Papworth
