New legislation being passed by the government will remove the compulsory age deadline of 75 for those who are looking to buy an annuity with their pension. In 2011 the government are introducing a new ruling that will completely remove the deadline so that pensioners can wait for annuity rates to rise before securing their income.

A number of pensioners and investment advisers are outraged with the current system which can further punish those with larger pension pots by subjecting them to a low income if annuity rates are particularly low due to market forces. One of most controversial policies under current legislation is the fact that if pensioners die before their annuity is fully paid the remaining amount is usually paid to the insurance company.

New government ruling will change this system dramatically and allow pensioners to shop around and wait for the highest annuity rates available before signing up to a scheme. For wealthy investors who can prove that they have a pension income of at least 20,000, made up of annuities, state pension and salary pension, the option of a draw down unlimited income is also available.

The minimum income threshold will help to protect the government’s funds as those with small pensions often run out of money quickly and require help from the state so no unlimited income will be offered. Many investors have considered the threshold too high for the majority of pensioners however with the government stating that annuities, salary pensions and state pensions being included in that amount it seems fair.

One of the biggest advantages of the new legislation is that the investor’s estate can receive a lump sum that remains from the pension if the pensioner dies. This is in stark contrast to the previous system in which no money was returned but kept by the insurance company, however this comes with a price tag as the government has imposed a 55% tax on any money that is returned to the estate.

Find out more about a pension annuity and how much income you could receive in your retirement.