Solvency II will prompt a raft of asset-backed annuities to hit the market, with Legal & General (L&G) preparing the release of its own product.

Industry commentators have welcomed the government’s consultation on removing the obligation to annuitise by age 75, but warn the proposals for a Minimum Income Requirement (MIR) must be exercised fairly.

The first longevity risk model to look at future medical advances to predict mortality rates has been launched by Risk Management Solutions (RMS).

It could be said that America and the UK are two nations divided by a common economic problem – the declining provision of workplace pensions and the failure of many millions to save for retirement.
But if the situation in the UK seems bad, pity our American cousins. Roughly half of the country’s workers are employed by companies with no pension scheme, which means about 78 million Americans are approaching a retirement having accrued no workplace savings. For a country with an inherent dislike of federal paternalism, the prospect of tens of millions relying on state handouts in old age is a scary one.

What is your initial reaction to the new government’s approach to pensions?

Chris Smeaton: Until we have seen the emergency Budget, we are not sure what it’s going to entail, but some of the early indications are quite promising. The removal of compulsory annuitisation at age 75 has been there for four years via ASP [alternatively secured pensions] anyway, so I do not see why that makes a massive amount of difference. Giving people more flexibility about when they take their money out of their pension makes a lot of sense. So, there are some encouraging signs, but it is a bit too early to get excited.

Deputy prime minister Nick Clegg has called for a major overhaul of public sector pensions as the cost of their provision is expected to double over the next four years.
Figures from the Office for Budget Responsibility indicate annual costs will rise from £4bn in 2010/2011 to £9bn in 2014/2015, or £143 for every one of the 62.7 million inhabitants of the UK.