Government wants to allow sale of annuities

Investing and pensions

Updated on 16 March 2015 | 2 Comments

Chancellor George Osborne has confirmed the Government wants to extend pension freedoms to those who already have an annuity.

The Government has confirmed that it wants to give pensioners who already hold an annuity the option to sell it.

It has been widely rumoured that this measure would be unveiled in this year’s Budget speech and Chancellor George Osborne, appearing today on the Andrew Marr Show on BBC TV, confirmed it. The Treasury has subsequently issued a statement confirming it too.

The restriction on buying and selling annuities would be lifted from April 2016. Pensioners will be able to either cash in an annuity for a lump sum or use what’s known as income drawdown – where the cash is reinvested and a regular income is drawn from it.

Around five million people will be allowed to sell their annuity if the measures go ahead.

George Osborne said: “There are five million pensioners who are locked into annuities they have already bought. They should have the same freedoms as we have given everyone else.

“For most people, sticking with that annuity is the right thing to do. But there will be some who would welcome being able to draw on that money as they choose – the same freedom we are offering those approaching retirement in April this year.”

There has been concern in the pensions industry that retirees selling their annuity to take advantage of the new rules will receive a far lower price than the annuity is worth. There are also fears that it will lead to people running out of money in retirement and needing state support.

The Government will launch a consultation into the change alongside the Budget on Wednesday (18th March).

However, a change of government at the General Election could mean the plans could be amended or even scrapped.

Comments

Be the first to comment

Do you want to comment on this article? You need to be signed in for this feature

Copyright © lovemoney.com All rights reserved.

 

loveMONEY.com Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FCA) with Firm Reference Number (FRN): 479153.

loveMONEY.com is a company registered in England & Wales (Company Number: 7406028) with its registered address at First Floor Ridgeland House, 15 Carfax, Horsham, West Sussex, RH12 1DY, United Kingdom. loveMONEY.com Limited operates under the trading name of loveMONEY.com Financial Services Limited. We operate as a credit broker for consumer credit and do not lend directly. Our company maintains relationships with various affiliates and lenders, which we may promote within our editorial content in emails and on featured partner pages through affiliate links. Please note, that we may receive commission payments from some of the product and service providers featured on our website. In line with Consumer Duty regulations, we assess our partners to ensure they offer fair value, are transparent, and cater to the needs of all customers, including vulnerable groups. We continuously review our practices to ensure compliance with these standards. While we make every effort to ensure the accuracy and currency of our editorial content, users should independently verify information with their chosen product or service provider. This can be done by reviewing the product landing page information and the terms and conditions associated with the product. If you are uncertain whether a product is suitable, we strongly recommend seeking advice from a regulated independent financial advisor before applying for the products.