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ABI welcomes postBudget HMRC guidance and confirms insurers approach customers affected by Budget

The ABI has welcomed the HMRC guidance released today by the Government and FCA following the changes to the retirement income framework announced in the Budget.

To coincide with the guidance, the ABI is confirming that its members are continuing to extend annuity cancellation periods until at least 17th April 2014 (an additional month after the Budget), or are contacting customers (either directly or via an adviser) to confirm whether they want to go ahead with their chosen annuity.

The additional flexibility around “cooling off periods” shown by insurers since the Budget has allowed customers the opportunity to decide what retirement option they prefer and to consider if they wish to continue with their purchase or change their minds.

The confirmation from HMRC today that there will not be tax penalties for people within the cooling-off period who wish to reverse an annuity decision comes alongside additional guidance from the FCA.

The industry-wide commitments by insurers on how customers are being assisted following the Budget  follows the radical reforms announced by the Chancellor that changes the way savers can turn their savings into an income in retirement. Many people will still choose to proceed with an annuity purchase but others may wish to take longer to consider their options. Annuity purchases already have a standard 30 day cooling off period to allow people to change their minds if they want to –  the effect of today’s announcement is that those providers extending the cooling off period will have allowed customers an additional month beyond the Budget.

Huw Evans, Director of ABI Policy and Deputy Director General comments:

"We welcome today’s guidance from HMRC which is pragmatic and realistic and will assist customers and providers to take the right decision. However we regret it has taken three weeks since the Budget for this clarification to be forthcoming; this has been three weeks of limbo for all those seeking to take crucial decisions about their retirement future in the light of the Budget announcements.

"Since Budget Day, ABI members have been committed to making sure customers can take advantage of the new pension flexibility available now and from next year. For customers who have started but not yet completed the process of purchasing an annuity, and were in the cancellation period on Budget day, ABI members are either extending their cancellation period to at least 17 April to allow customers time to decide; or alternatively, ensuring that every customer is being contacted by their provider or adviser to inform them of their new options and confirm whether they want to go ahead. 

"ABI members also aim to restore cancelling customers to their pre-decision position as far as possible; and where it is not possible for the original pension provider to achieve this, the new provider and the original provider aim to find a solution so that the customer can benefit from the Budget changes. These are meaningful commitments by the insurance industry which has worked hard in the three weeks since the Budget to assist customers and give them the best options they can.”

For many customers who want the security of a guaranteed income during their retirement,  an annuity will continue to be the right option. But all customers who are making decisions about their retirement income now should take action to ensure they are still taking the right decision. 

Last updated 01/07/2016