Secondary annuities market
Late last year, the government announced that a new secondary annuity market would be created by April 2017. However, after an extensive period of research, it has been decided to cancel these plans. The government was concerned that the consumer protections required would make it difficult to establish a secondary annuities market and that the fees to cash in an existing annuity would have been too high.
The introduction of new freedoms to sell annuities would have benefited more than five million people who own an annuity as well as anyone who purchases an annuity in the future. There are likely to be many disappointed pensioners and campaigners who had hoped for these changes to be put in place. This will especially affect those who retired before the new pension freedom measures came into effect in April 2015 and had little choice but to purchase a pensions annuity product.
Announcing the change in policy, the Economic Secretary to the Treasury, Simon Kirby, said:
‘It has become clear that we cannot guarantee consumers will get good value for money in a market that is likely to be small and limited. Pursuing this policy in these circumstances would put consumers at risk – this is something that I am not prepared to do.
The government has always been clear that for the majority of people keeping their annuity incomes will be their best option, estimating that only 5% of people who currently hold an annuity would take advantage of this reform.’