Small pension holders could benefit from proposed government changes to the way defined contribution pensions operate.

The government is considering the removal of compulsory indexation on defined contribution (DC) schemes, helping people convert their current schemes into annuities.

Joanne Segars, head of pensions and savings at the Association of British Insurers, welcomes the proposals: “We are pleased that the government has listened to our concerns and is prepared to give the growing numbers of people in DC schemes greater choice.”

Ms Segars adds: “This will make it much easier for people to shop around and buy the annuity that best suits their needs. Making pensions simpler will encourage more people to join pension schemes.”