Nick Salter, President of the Institute and Faculty of Actuaries (IFoA), comments on the measures announced in today’s Autumn Statement

“In 2014 we have experienced the beginning of a pensions revolution; where individuals retiring will be able to decide how to use their pension assets to best suit their own circumstances.  The Autumn Statement continues this process, with the abolition of inheritance tax on joint life or guaranteed term annuities for those who die before the age of 75.  The IFoA would welcome clarification that the new rules on inheritance of annuities apply to all existing joint life and guaranteed term annuities, or that it would only apply to new policies after 2015.   

“We maintain that offering greater freedom of choice can offer flexibility and opportunity for pensioners but it also brings with it the risk that individuals underestimate their longevity and run out of money in retirement.  The best outcomes for individuals are likely to depend on having access to good guidance and, where required, good independent advice. 

“The IFoA is encouraged that the Chancellor has not introduced any further major pension reforms, allowing the pensions industry time to focus attention on establishing the appropriate framework in advance of April 2015, when the majority of changes are due to take effect.

“The IFoA sees the announcement on flood and coastal defence schemes as a positive step toward improving flood resilience. The long term affordability of flood insurance will ultimately depend in part on the extent of investment in national flood defences and its ability to materially reduce the extent of flooding and associated damage.   We would hope that the investment strategy will include surface flooding which has been a major cause of flood damage in recent years and that it will manage the risks associated with future development on flood plains.

“Flood defences will be even more important over the long term with the potential consequences of climate change and the increase in extreme weather events. Our Resource and Environment Board and Climate Change Working Party will be looking at how actuarial science can assist policy makers to respond to these challenges.”