U-turn on pension scheme
Government ditches annuity market plan
Former Chancellor George Osborne wanted a “secondary market” as part of the pension “freedoms” introduced in April 2015. It would have given pensioners the chance to cash-in those policies that pay a low income.
But after wide consultation the government has now cancelled the planned launch of the new market next year.
The decision has divided opinion between those who believe there would have been little demand from buyers for low income annuities and those who say it is an opportunity missed for those stuck with poor-paying products.
Rachel Vahey, product technical manager at Nucleus Financial in Edinburgh, tweeted: “A lot of time and effort has been wasted trying to build a secondary annuity market, when clear from start wouldn’t offer consumer protection.”
However, Paul Green, director of communications at Saga, said many pensioners will be disappointed.
He said: “This is a surprising announcement. The initial decision to give people the power to sell their annuity was borne from pension freedoms introduced last year and the desire that all retirees could enjoy them. The cancellation of the secondary annuity market quashes that notion.
“The development of this kind of market was always going to be complex, and we await more detail about the consumer protections that the government felt this market was unable to provide.
“However, there will be many pensioners who will be sorely disappointed – thousands of people who receive minimal income from annuities they were forced to buy would have benefited from a way to sell their annuity.
“Indeed, research carried out by Saga found that 58% of people who wanted to sell their annuity were receiving such a small income they could do nothing meaningful with it. It looks now that there will be no way for them to turn that meagre income back into a lump sum.”