The Association of British Insurers (ABI) has produced a series of proposals aimed at improving the returns that employees receive from defined contribution pensions.
The paper, entitled ‘Time for Change: Seven proposals to improve DC pension benefits in retirement’, argues the case for lifting existing restrictions on how pension funds are managed.
The ABI said that the age at which people can buy an annuity with their fund should be raised from the present upper limit of 75 to 80.
Meanwhile, married couples and partners should be encouraged to look at the advantages of merging their retirement income funds.
Other proposals included the development of ‘value protection annuities’ that provide a lifetime income guarantee; tackling the issue of ‘stranded pots’ by harmonising rules for occupational and contract-based defined contribution pensions; and increasing the income allowance for alternatively secured pensions.
Maggie Craig, the acting director general of the ABI, said: “The UK pensions landscape is undergoing huge change, with the numbers drawing benefits from defined contribution pensions savings in 2010 set to exceed 500,000.
“The good news is that these people can expect to live longer. However, this improvement brings new pressures, which means the current rules and regulations are not fit for purpose.”
Ms Craig added: “The savings industry is keen to rise to the challenge and meet the needs of Britain’s savers. Our proposals would make a real difference and help ensure people retiring from defined contribution schemes get the most from their savings.”