The announcement that the effective compulsion to buy annuities at age 75 has been removed caught me by surprise. There have been so many false dawns over this issue that I thought, despite the coalition rhetoric, the change would come about in a second Parliament. I use the words “effective compulsion” wisely because the last time I wrote about the age 75 issue, a very eminent commentator quite rightly pointed out that since Asp was introduced in 2006, it has been no longer compulsory to buy annuities.

I have just come across Budget Note 22 which gives details of the new transitional rules.

The Government has just announced that it will end the existing rules that create an effective obligation to purchase an annuity by age 75 from April 2011. A consultation on the detail of this change will be launched shortly. Legislation for transitional arrangements will be in the Finance Bill after the Budget for those yet to secure an income who will reach 75 in the meantime.

The risk paradox - put simply, many retired investors might have to take some risk with their annuity income in order to end up in a less risky position. The keys to understanding this paradox are longevity and inflation