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.
[SPOTLIGHT]“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.