Correspondence: John Hayward, Carr Sheppards Crosthwaite, Clock House, Dogflud Way, Farnham, Surrey, GU9 7UL. Tel: +44 (0) 1252 733345; Fax: +44 (0) 1252 737196; e-mail: mhumphrey@carr-sheppards.co.uk

¹is a senior pension consultant with Carr Sheppards Crosthwaite Limited. He was formerly a principal in the Inland Revenue Pension Schemes Office and has spent 14 years in pensions consultancy. He lectures and writes frequently on pension matters with regular monthly articles in Tax Journal since 1993. He wrote the original book, 'SSAS – SIPPS – FURBS', published by Tolleys as the leading work on small self-administered pension schemes, self-invested personal pension schemes and funded unapproved retirement benefit schemes.

Received 28 May 2002.

Abstract

This paper sets out the Inland Revenue's (IR) requirements for the compulsory purchase of an annuity to secure the retirement benefits of members of occupational and personal pension schemes. It looks at the origins of the requirement and changes that have since taken place including the income drawdown facility. The reasons for the requirement are examined together with the age limit of 75. Finally, the Department for Work and Pensions (DWP) and IR's case for retaining the compulsory purchase of annuities and improvements to annuity products are looked at as well as the case for abolition of the requirement.