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05 Dec 08: Pensions Ombudsman welcomes decision to extend period for annuity purchase

“The kind of flexibility that pensioners need” – Paul Kenny. The Pensions Ombudsman, Mr. Paul Kenny, today welcomed the decision by the Government to relax the current rule which requires people in Defined Contribution occupational pension schemes to purchase an annuity at the time they retire. “When I launched my Annual Report and Digest of Cases last week, the Minister for Social & Family Affairs, Mary Hanafin T.D. signalled that the Government was aware that the inflexibility in the current rule was causing serious concern as it required those about to go on pension to crystallise current stock market losses for the remainder of their pensionable life. I am pleased that the Government has recognised the need for flexibility in this area.” He said that allowing people about to go on pension to defer the purchase of an annuity for up to two years gives them breathing space. “At the time the rule was brought in it was fine. However, to ask someone, who over the years has taken the prudent course and planned diligently for their retirement, to capture and suffer the pain of the current financial crisis for the remainder of their retirement is patently unfair. Furthermore it runs completely contrary to the message to younger people that they should plan now for their retirement”, he said. Mr. Kenny said that while it is impossible to predict the best time to purchase the annuity, in the current climate it is not right to restrict the freedom of choice and I am very pleased that the Government has recognised this. “The investment market will undoubtedly rebound in time and I am pleased that people are not condemned to lock in current losses for the remainder of their lives. However, the two–year period of the current concession should be kept under review in the light of market conditions”, he added. 5th December, 2008 Ends.