You are here: cherry > Press releases for August 2010 > ‘Nightmare scenarios’ for thousands of pensioners as Annuity Direct reveals many life firms have not updated their systems to cope with changes in Emergency Budget

18 August 2010

Outmoded computer systems not geared up to cope with age 75 rule change ‘Pathetic’ apathy of life giants condemned by Annuity Direct’s Bullivant Thousands potentially disadvantaged by insurer greed THOUSANDS of pensioners wanting to take advantage of the Government’s scrapping of the ‘Age 75’ ruling on unsecured pensions are facing serious income stream issues – because many insurance giants’ systems are not geared up for the changes. Annuity Direct, the retirement planning specialist, estimates that several thousand people currently now past their 75th birthday and wanting to enjoy a drawdown income from their pension funds will have to move to another pensions firm in order to continue receiving income – incurring significant costs along the way in transfer fees. “Since the new ruling extending the cut off point where pensioners have to convert their pension funds to an annuity was extended from 75 to 77 in the June Emergency Budget, we have become aware of serious problems affecting some life companies’ ability to continue paying income beyond the age of 75 under unsecured pension drawdown rules,” said Annuity Direct’s Bob Bullivant. “As a percentage of the numbers of people currently taking advantage of the unsecured pension drawdown rules, it is reasonable to believe that it is thousands, rather than hundreds who are affected by incompatible insurance company systems,” he said. “So far it seems that only clients with arrangements at Aegon, Standard Life and Prudential will be able to continue to draw income. “This means that a 75 year old may have to stop taking income or transfer (at considerable cost) to a new provider which has updated its systems to enable income payments to continue,” added Bullivant. “It is nothing short of a disgrace that firms have yet to haul their systems into line with the Coalition Government’s changes – after all, the industry has been aware for many years that the incumbent rules under Labour would be scrapped the moment the old administration was replaced,” he said. “Frankly, I am appalled – if the supposedly state of the art systems are so poor as to reduce the income of someone in their mid seventies then they have no right to stay in business. Once again the insurer’s insatiable greed for new business without proper systems in place is displayed,” he added. Bullivant added that Annuity Direct has also identified clients who have guaranteed annuity rates - and under their policy the guarantee will run out once they reach age 75. “The insurers will not extend the guaranteed rate beyond 75 and so once again great care has to be taken when deciding what to do when reaching this time of your life – and remember that if tax free cash is not taken before age 75, it is lost. “This whole issue is turning into a night mare – not helped by the pathetic systems of a number of mainstream providers.” Annuity Direct recently launched its FAIR USP (FUSP) campaign, which called on all professional advisers and other interested parties to pressurise the FSA and product providers to create a fair analysis of critical yields. Since launch, Just Retirement and Prudential are just some of the big names to give their support to the campaign’s principles. Those wishing to show their support for the campaign can register by logging on to the website www.fairusp@annuitydirect.co.uk Ends

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