Treasury abandons plans to allow pensioners to sell annuities
20 Oct 2016
The Treasury has announced that it is shelving George Osborne’s plan to allow pensioners to sell their annuities for cash.
The former Chancellor mooted the idea in March 2015 as part of his plan for wide-ranging ‘pension freedoms’.
The scheme would have given people who already hold an annuity similar freedoms to those approaching retirement, who are no longer required to buy an annuity with their pension pot. Individuals would have been able to sell their annuity income without the current tax restrictions, providing their annuity provider agreed.
However, the idea has been dogged by controversy, with many experts predicting that those who sold their annuities would be likely to get a poor deal.
The Association of British Insurers (ABI) said the abandonment of the plan was the ‘right decision’. Rob Yuille, Head of Retirement Policy at the ABI, said: ‘The industry has consistently supported the freedom and choice reforms, but we agree with the Government that the secondary annuity market came with considerable risks for customers, including from unregulated buyers.’
Explaining the decision, Simon Kirby, Economic Secretary to the Treasury, said: ‘Allowing consumers to sell on their annuity income was always dependent on balancing the creation of an effective market with making sure consumers are properly protected.
‘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.’