UK retirees will suffer if 'freedom and choice' causes the collapse of the annuity market, says Tor Financial managing director David Harris.
Speaking at the Pensions and Benefits UK, Harris said HM Treasury "needs to wake up" and realise the importance of annuities in tackling longevity risk.
With the number of old people continuing to grow, he said the UK had to look at other countries in the world and learn from their experiences with annuities, he added.Harris cited the example of South Africa as a country "to watch" where policymakers understood the value of annuities and communicated this to the public.
The UK could learn from its example to help the public appreciate the importance of annuities in dealing with longevity risks, he continued.
Chile, where annuities are bought in droves and New Zealand, where none were sold last year, were two other examples Harris used to highlight how annuities could evolve in Britain.
He warned the UK pensions system could end up where New Zealand is currently if the current freedom and choice reforms went wrong: "We could go back to New Zealand, a whole country of 4.8 million people which does not have an annuity market."
Alongside annuities, Harris said the Treasury and DWP needed to develop long-term policy goals and decide what pensions were for.
Employers, providers and financial advisers also needed to work harder to provide financial guidance, he continued.
The National Employment Savings Trust (NEST) recently revealed it would look to provide deferred annuities as part of its income drawdown solution.
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